Why was the Great Depression not so great in the Nordic countries? : economic policy and unemployment

Abstract

The present paper seeks to examine why the Nordic countries performed better than most other Western countries during the 1930s, when they at the same time experienced high unemployment levels. The conclusions drawn here are that the early abandonment of gold and the adoption of a more inflationary monetary policy serve as the key explanation to the relatively mild Nordic depression and the rapid recovery. However, the paradox of persistently high unemployment remains. By international comparisons the paper shows that these rather can be explained by a positive shift in labour supply than the scale of the depression. The analysis in the paper also reveals that Sweden performed more like continental Europe in respect of both the depression and the labour market.