OVERVALUED: SWEDISH MONETARY POLICY IN THE 1930s

Alexander Rathke, Tobias Straumann and Ulrich Woitek

International Economic Review, 2017, vol. 58, issue 4, 1355-1369

Abstract: The article discusses Sweden's monetary policy in the 1930s, which has been hailed as the first and only example of successful price†level targeting. Our contribution is twofold. First, we argue that the crucial measure that immediately ended deflationary expectations and enabled a swift recovery was a strong and involuntary devaluation of the currency, not the adoption of a new monetary policy framework. Second, starting from the recent literature on monetary policy at the zero†lower bound, we conclude that Sweden's exchange rate policy is more relevant for the current discussion than its tentative experience with price†level targeting.

Date: 2017
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https://doi.org/10.1111/iere.12254

Related works:
Working Paper: Overvalued: Swedish Monetary Policy in the 1930s (2011)
Working Paper: Overvalued: Swedish monetary policy in the 1930s (2011)
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