Many countries have experienced major economic changes since the mid-1980s as a result of the deregulation and liberalization of national financial systems—two key aspects of globalization—with some experiencing boom and bust in rapid succession. The small Northern European country of Finland has been hailed as a success story for achieving renewed economic growth and prosperity after a financial crisis and deep depression in the early 1990s. Economic Prosperity Recaptured offers a detailed analysis of the rapid swings in Finland's recent economic development, from initial overheating in the late 1980s through deep crisis in the early 1990s to recovery and growth since the mid-1990s.
Finland's complex road to recovery offers excellent examples of both unsuccessful and successful policy responses to changing circumstances. The authors examine the three relatively distinct periods of Finland's recent experience, analyzing the adequacy of the macroeconomic policy response in each case. They assess the real economic effects of financial constraints and look for evidence of the "credit channel" of the monetary system. Finland's rapid economic growth since the mid-1990s is largely the result of its structural transformation into a high-tech economy; Nokia is the most famous example of this information and communication technology success. Elaborating on Finland's ICT revolution, the authors demonstrate that well-designed economic policies contributed to Finland's economic turnaround.
CESifo Book series
About the Authors
Seppo Honkapohja is Professor of International Macroeconomics at the University of Cambridge and a member of the Board of the Bank of Finland.
Erkki A. Koskela is Professor of Public Economics at the University of Helsinki and Academy Professor of Economics at the Academy of Finland.
Willi Leibfritz worked with the OECD from 2001 to 2007, retiring as Head of Division in the Economics Department.
Roope Uusitalo is Research Director at Finland's Government Institute for Economic Research (VATT).
"Economic Prosperity Recaptured presents an illuminating account of Finland's economic history over the past two decades: the lending boom of the late 1980s, the major banking crisis of the early 1990s, and the spectacular transformation into a fast-growing high-tech economy since the mid 1990s. Each of these phases is analyzed and explained using frontier research in open macroeconomics and in growth theory. This book teaches a lot on how to conduct policy, and in particular on how to solve our current financial crisis."
Philippe Aghion, Robert C. Waggoner Professor of Economics, Harvard University, and co-author of The Economics of Growth
"Finland's phoenixlike rise from the ashes is one of the great economic success stories of the late 20th century, and no one tells it better than these authors. Their tale is all the more poignant now that many of the advanced countries in the world have equally severe financial problems and face equally daunting economic challenges."
Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, Universiy of California, Berkeley