3 research outputs found
Off Gold and Back again: Finnish and Swedish Monetary Policies 1914-1925
Sweden went back to gold at the preâwar parity, whereas Finland returned at the existing rate, accepting the depreciation of the markka that had occurred over the war and early postâwar years. The authors use a quantityâtheory 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 postâwar 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