Catching-up Strategies in CESEE Economies
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 3: Re-establishing Growth After the Crisis – Lessons from the Nordic Countries
Seppo Honkapohja1 INTRODUCTION 1 The financial crisis that started in 2008 led to a very big recession and also seems to have longer-term consequences for the international economic environment. The recession has resulted in large output gaps, that is, differences between actual and potential output. Re-establishing growth requires, as a first stage, closing of the output gaps. It is also clear – though current information is not so precise – that potential output and growth have also been affected by the crisis and recession. The second stage in the process for catching-up by the CESEE economies must then focus on growth prospects on the supply side, that is, potential output. The first part of this chapter discusses the experience from earlier financial crises, using the 1990s crisis in the Nordic countries – that is, in Finland and Sweden (and also partly Norway), one of the biggest crises in advanced economies since the 1970s – as a ‘case study’. This case is worth considering because the crisis resolution in the Nordics was successful and thus some general lessons can perhaps be learned. The second part of my remarks addresses some ideas and principles that the CESEE countries may want to consider when they reformulate their catching-up processes after the current crisis. 2 THE NINETIES CRISES IN THE NORDIC COUNTRIES The fundamental reason for the financial crises of the Nordic countries lies in the financial liberalization in the 1980s. This process created a boom and overheating situation and led to large increases in real estate 19...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.