Euro – How big a difference. Finland and Sweden in search of macro stability

Paavo Suni and Vesa Vihriälä

Revue de l'OFCE, 2014, vol. N° 132, issue 1, 269-286

Abstract: The different monetary regime choices of two strikingly similar economies Finland and Sweden have created a particularly interesting testing ground for the benefits of the EMU. We assess the effects of the regime choice by simulating the behaviour of the Swedish economy with National Institute?s Global Econometric Model (NiGEM) on the assumption that Sweden had joined the EMU in 1999. The simulation exercise suggests that the independent monetary regime reduced the impact of the global shock on Sweden, but cannot explain the growth gap between Sweden and Finland since 2012. Our results suggest that the different choices with regard to the EMU have not affected the macroeconomic outcomes very much.

Keywords: Finland; Sweden; EMU; simulation; counter factual (search for similar items in EconPapers)
Date: 2014
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