Off Gold and Back again: Finnish and Swedish Monetary Policies 1914-1925

Summary, in English

Sweden went back to gold at the pre‐war parity, whereas Finland returned at the existing rate, accepting the depreciation of the markka that had occurred over the war and early post‐war years. The authors use a quantity‐theory framework to investigate the results of the divergent exchange rate and monetary policies followed by the two countries. The Swedish economy was forced to undergo a severe contraction, while Finland escaped the need for such an adjustment at the cost of a higher rate of inflation, and enjoyed a post‐war boom on the basis of its devalued currency. However, this was not the result of a deliberate choice on the part of the Finnish authorities: it was rather that the central bank lacked the resources needed to support the markka.

• Author: Lars Jonung; Tarmo Haavisto
• Editor: Charles H. Feinstein
• Department/s: Department of Economics
• Publishing year: 1995
• Language: English
• Pages: 237-266
• Publication/Series: Banking, Currency and Finance in Europe between the Wars
• Links: http://dx.doi.org/10.1093/0198288034.003.0009
• Document type: Book chapter
• Publisher: Oxford University Press
• Topic: Economics
• Status: Published
• ISBN/ISSN/Other: ISBN: 0198288034