The European Commission have just released a new working paper by Lars Jonung, Jaakko Kiander and Pentti Vartia that examines the boom-bust-recovery cycle in Finland and Sweden.
The paper is available here: The great financial crisis in Finland and Sweden – The dynamics of boom, bust and recovery, 1985-2000
One reply on “Banking Crises: Lessons from Finland and Sweden”
This is a very worthwhile and timely paper. For me, the main takeaways are (i) the great and poorly understood dangers that attach to a credible currency peg, (ii) the very large price, in terms of lost output and employment, that governments are prepared to pay in their attempts to maintain such a peg and (iii) the essential role played by large currency depreciations in the recoveries in both Finland and Sweden. The last point raises an interesting question about how Ireland as a euro zone member will get out of jail.