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Saturday, February 2, 2013

The Great Depression in Europe: Selected Comparative Data on GDP

I have assembled data on real GDP loss during the Great depression in Western Europe for 12 nations: Austria, Germany, France, Netherlands, Switzerland, Belgium, Norway, Sweden, UK, Italy, Finland, and Denmark. Countries not listed are Portugal, Spain and Ireland.

We can rank the real output loss in Western European nations from the most severe to the least severe, as follows:
Nation | Real GDP loss | Years of Contraction
Austria | 22.45% | 1929–1933
Germany | 16.11% | 1929–1932
France | 14.65% | 1930–1932
Netherlands | 9.46% | 1930–1934
Switzerland | 8.02% | 1930–1932
Belgium | 7.89% | 1929–1932
Norway | 7.75% | 1931
Sweden | 6.20% | 1931–1932
UK | 5.80% | 1930–1931
Italy | 5.47% | 1930–1931
Finland | 3.97% | 1930–1932
Denmark | 2.62% | 1932
From this we can see that Austria and Germany had the most severe depressions in the data, with France not far behind.

The Netherlands, Switzerland, Belgium, Norway, Sweden and UK had real output losses ranging from 9.46 to 5.8%

Most surprising is how comparatively mild the Great Depression was in Finland and Denmark. I have not investigated why this is.

What is most interesting is that, of all nations in the data, Austria had the worst depression: it lost 22.45% of real GDP from 1929–1933. Also, as can be seen from the data below, its recovery was so poor it was almost stagnation.

In these years the country was run by the Austro-fascist Engelbert Dollfuss, who became Chancellor of Austria in May 1932. In March 1933, Dollfuss effectively abolished democracy, and established an authoritarian regime, but was assassinated in July 25, 1934 and replaced by another dictator called Kurt Schuschnigg, who was Chancellor from July 1934 to the Anschluss in March 1938. While Dollfuss engaged in some limited interventions in the economy, mostly he seems to have pursued deflationary austerity.

Hans-Hermann Hoppe tells us, quite shamelessly, that Mises was a close adviser of Dollfuss:
“Engelbert Dollfuss [sc. was] ... the Austrian Chancellor who tried to prevent the Nazis from taking over Austria. During this period Mises was chief economist for the Austrian Chamber of Commerce. Before Dollfuss was murdered for his politics, Mises was one of his closest advisers.”
Hans-Hermann Hoppe, “The Meaning of the Mises Papers,” Mises.org, April 1997
We can obtain some background on the type of policies implemented by the Austro-fascists:
“In tackling the economic crisis the Dollfuss-Schuschnigg dictatorship pursued harsh deflationary policies designed to balance the budget and stabilize the currency. The government’s program featured severe spending cuts, high interest rates, and frozen wages. …. In a sense the Christian Corporative regime demonstrated the viability of the Austrian state, but it did so at the cost of alienating a majority of the Austrian people. On the eve of Anschluss a third of the population was still out of work, while those fortunate enough to have jobs were bringing home paychecks considerably smaller than before the Great War” (Bukey 2000: 17).

“Beginning in in 1931, [Austrian] unemployment grew rapidly, reaching a peak in 1933–6, with between 24 and 26 per cent of the labour force out of work .... When, in 1937 and 1938, there was a modest recovery, unemployment never dropped below the 20 per cent value. This had a devastating effect on the legitimacy of the Austrian system .... As the Austrian government sustained its reluctance to apply Keynesian policies, the economic recovery never entered a serious tale-off phase in the second half of the 1930s. Linked to an exhausted determination of the Austrian government to resist the pressures from Germany, the economic crisis of the 1930s should be seen as an additional reason why the Austrian society was receptive to the annexation by Germany in March 1938” (Gerlich and Campbell 2000: 55).
I have also found some data on unemployment in Austria here (which appears to come indirectly from Maddison [1982]):
Austrian Unemployment (% of Total Labour Force)
Year | Unemployment Rate

1929 | 5.5%
1930 | 7.0%
1931 | 9.7%
1932 | 13.7%
1933 | 16.3%
1934 | 16.1%
1935 | 15.2%
1936 | 15.2%
1937 | 13.7%
1938 | 8.1%
Unemployment soared to 16.3% by 1933 and stayed virtually the same for a further three years. All in all, the unemployment data shows no serious decrease until 1938, the year Austria was integrated into the interventionist economy of Nazi Germany, after which unemployment fell rapidly (it fell to 3.2% by 1939 [Kirk 2002: 68]).

So the only nation where a major Austrian economist was giving some kind of policy advice (and I assume it was liquidationism) had one of the worst depressions (possibly the worst) in Western Europe and an unsuccessful recovery. Things were so bad that the Austrian population to some degree became sympathetic to the German annexation in 1938.

Certain lessons suggest themselves from this data, but I doubt whether Austrians have either the wit or intelligence to learn them.

To return to the broader issue here, a detailed analysis of the monetary and fiscal policies in each country is an enormous research task, but I will attempt gradually to fill it out in updates to this post. At present, I have some analysis on Norway (see below).

1. Italy
Real GDP in Italy, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 121 182 |
1929 | 125 180 | 3.29%
1930 | 119 014 | -4.92%
1931 | 118 323 | -0.58%

1932 | 122 140 | 3.22%
1933 | 121 317 | -0.67%
1934 | 121 826 | 0.41%
1935 | 133 559 | 9.63%
1936 | 133 792 | 0.17%
1937 | 142 954 | 6.84%
1938 | 143 981 | 0.71%
1939 | 154 470 | 7.28%
1940 | 155 424 | 0.61%
1941 | 153 517 | -1.22%
1942 | 151 610 | -1.24%
1943 | 137 307 | -9.43%
1944 | 111 562 | -18.74%
1945 | 87 342 | -21.70%
(Maddison 2003: 50).
From 1930 to 1931 the real GDP loss was 5.47%.

2. Austria
Real GDP in Austria, 1928–1938
* in millions of international Geary-Khamis dollars
1928 | 24 295 | 4.64%
1929 | 24 647 | 1.44%
1930 | 23 967 | -2.75%
1931 | 22 044 | -8.02%
1932 | 19 769 | -10.32%
1933 | 19 113 | -3.31%

1934 | 19 277 | 0.85%
1935 | 19 652 | 1.94%
1936 | 20 238 | 2.98%
1937 | 21 317 | 5.33%
1938 | 24 037 | 12.75%
1939 | 27 250 | 13.36%
1940 | 26 547 | -2.57%
1941 | 28 446 | 7.15%
1942 | 27 016 | -5.02%
1943 | 27 672 | 2.42%
1944 | 28 376 | 2.54%
1945 | 11 726 | -58.67%
(Maddison 2003: 50).
During Austria’s deflationary depression from 1929 to 1933, real output fell by 22.45%.

3. Switzerland
Real GDP in Switzerland, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 24 609 |
1929 | 25 466 | 3.48%
1930 | 25 301 | -0.64%
1931 | 24 246 | -4.16%
1932 | 23 422 | -3.39%

1933 | 24 593 | 4.99%
1934 | 24 642 | 0.19%
1935 | 24 543 | -0.40%
1936 | 24 626 | 0.33%
1937 | 25 796 | 4.75%
1938 | 26 785 | 3.83%
1939 | 26 752 | -0.12%
1940 | 27 032 | 1.04%
1941 | 26 851 | -0.66%
1942 | 26 175 | -2.51%
1943 | 25 944 | -0.88%
1944 | 26 571 | 2.41%
1945 | 34 202 | 28.71%
(Maddison 2003: 51).
The real output loss from 1930 to 1932 was 8.02%.

4. Germany
Real GDP in Germany, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 263 367 | 4.37%
1929 | 262 284 | -0.41%
1930 | 258 602 | -1.40%
1931 | 238 893 | -7.62%
1932 | 220 916 | -7.52%

1933 | 234 778 | 6.27%
1934 | 256 220 | 9.13%
1935 | 275 496 | 7.52%
1936 | 299 753 | 8.80%
1937 | 317 783 | 6.01%
1938 | 342 351 | 7.73%
1939 | 374 577 | 9.41%
1940 | 377 284 | 0.72%
1941 | 401 174 | 6.33%
1942 | 406 582 | 1.34%
1943 | 414 696 | 1.99%
1944 | 425 041 | 2.49%
1945 | 302 457 | -28.84%
(Maddison 2003: 50).
The real output loss from 1929 to 1932 was 16.11%, extended over four years of depression.

5. France
Real GDP in France, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 181 912 |
1929 | 194 193 | 6.75%
1930 | 188 558 | -2.90%
1931 | 177 288 | -5.97%
1932 | 165 729 | -6.51%

1933 | 177 577 | 7.14%
1934 | 175 843 | -0.97%
1935 | 171 364 | -2.54%

1936 | 177 866 | 3.79%
1937 | 188 125 | 5.76%
1938 | 187 402 | -0.38%
1939 | 200 840 | 7.17%
1940 | 165 729 | -17.48%
1941 | 131 052 | -20.92%
1942 | 117 470 | -10.36%
1943 | 111 546 | -5.04%
1944 | 94 207 | -15.54%
1945 | 102 154 | 8.43%
(Maddison 2003: 50).
The real output loss from 1930 to 1932 was 14.65%.

6. Netherlands
Real GDP in Netherlands, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 43 921 |
1929 | 44 270 | 0.79%
1930 | 44 170 | -0.22%
1931 | 41 475 | -6.10%
1932 | 40 901 | -1.38%
1933 | 40 826 | -0.18%
1934 | 40 078 | -1.83%

1935 | 41 575 | 3.73%
1936 | 44 195 | 6.30%
1937 | 46 716 | 5.70%
1938 | 45 593 | -2.40%
1939 | 48 687 | 6.78%
1940 | 42 898 | -11.89%
1941 | 40 627 | -5.29%
1942 | 37 133 | -8.60%
1943 | 36 235 | -2.41%
1944 | 24 306 | -32.92%
1945 | 24 880 | 2.36%
(Maddison 2003: 51).
The real output loss from 1930 to 1934 was 9.46%.

7. Belgium
Real GDP in Belgium, 1927–1945
* in millions of international Geary-Khamis dollars
1927 | 38 913 |
1928 | 40 951 | 5.23%
1929 | 40 595 | -0.86%
1930 | 40 207 | -0.95%
1931 | 39 496 | -1.76%
1932 | 37 717 | -4.50%

1933 | 38 525 | 2.14%
1934 | 38 202 | -0.83%
1935 | 40 563 | 6.18%
1936 | 40 854 | 0.71%
1937 | 41 404 | 1.34%
1938 | 40 466 | -2.26%
1939 | 43 216 | 6.79%
1940 | 38 072 | -11.90%
1941 | 36 067 | -5.26%
1942 | 32 962 | -8.60%
1943 | 32 198 | -2.31%
1944 | 34 094 | 5.88%
1945 | 36 132 | 5.97%
(Maddison 2003: 50).
From 1929 to 1932, there was a real output loss of 7.89%.

8. Denmark
Real GDP in Denmark, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 16 735 |
1929 | 17 855 | 6.69%
1930 | 18 917 | 5.94%
1931 | 19 127 | 1.11%
1932 | 18 625 | -2.62%
1933 | 19 220 | 3.19%
1934 | 19 804 | 3.03%
1935 | 20 247 | 2.23%
1936 | 20 749 | 2.47%
1937 | 21 251 | 2.41%
1938 | 21 765 | 2.41%
1939 | 22 803 | 4.76%
1940 | 19 606 | -14.0%
1941 | 17 668 | -9.88%
1942 | 18 065 | 2.24%
1943 | 20 061 | 11.04%
1944 | 22 161 | 10.46%
1945 | 20 493 | -7.52%
(Maddison 2003: 50).
Denmark’s real GDP loss was just 2.62% in 1932.

9. Norway
Real GDP in Norway, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 8 879
1929 | 9 705 | 9.30%
1930 | 10 421 | 7.37%
1931 | 9 613 | -7.75%
1932 | 10 255 | 6.67%
1933 | 10 500 | 2.38%
1934 | 10 837 | 3.20%
1935 | 11 302 | 4.29%
1936 | 11 993 | 6.11%
1937 | 12 422 | 3.57%
1938 | 12 734 | 2.51%
1939 | 13 339 | 4.75%
1940 | 12 152 | -8.89%
1941 | 12 446 | 2.41%
1942 | 11 963 | -3.88%
1943 | 11 724 | -1.99%
1944 | 11 112 | -5.22%
1945 | 12 452 | 12.05%
(Maddison 2003: 51).
In 1931 there was a real output loss of 7.75%.

Now Norway abandoned the gold standard in 1931 and implemented a loose and stimulative monetary policy, helping banks and apparently preventing financial collapse. A severe and prolonged deflation was avoided and moderate inflation resulted. This must have averted a debt deflationary collapse (though I do not know to what extent excessive private debt was an issue in the Norwegian economy). The end to the gold standard also allowed a currency depreciation, which stimulated export-led growth and import substitution.

Ole Colbjørnsen and the economist Ragnar Frisch proposed a strongly Keynesian policy to revive the Norwegian economy around 1933-1934, but I do not know to what extent it was actually implemented.

Some quick research seems to indicate that from 1935 under Johan Nygaardsvold the Norwegian government engaged in some mild Keynesian fiscal stimulus, though other economists deny this.

Apparently, the Nygaardsvold government did implement welfare measures and the economy revived from export-led growth (to a considerable extent driven by German demand for Norwegian goods) after 1935.

Although government spending rose, it appears to have been covered by tax increases. One suggestion has been that tax policy took in a certain amount of money that was not being spent on capital goods investment or consumption, and hence that government spending was stimulative to some degree, but other scholars dispute this:
“There was a significant growth in the public sector. However, this increase was levelled out by higher taxes. Thus, in this respect, the net effect on demand was neutral. On the other hand, the marginal propensities to consume and save differed from the public to the private sector. Empirical evidence from Norway reflects that the marginal propensity to consume was higher in the public sector than in the private. Thus, [ceteris paribus] ... the relative growth in the public sector had a positive impact on demand. Nevertheless, due to budget discipline and moderate multiplier effects the fiscal policy in Norway under the Labour Party rule in the 1930s was neutral. In sum, fiscal policy seems to have played a minor, if any, role for the relative good performance of the Nordic economies during the 1930s.”

Ola Honningdal Grytten, “Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment,” p. 18.
Moreover, the data indicates that Norway had a serious unemployment problem right up to the war:
Unemployment in Norway
Year | Unemployment Rate

1927 | 8.9%
1928 | 7.9%
1929 | 7.0%
1930 | 7.0%
1931 | 10.2%
1932 | 10.6%
1933 | 10.8%
1934 | 10.3%
1935 | 9.9%
1936 | 8.7%
1937 | 7.3%
1938 | 6.8%
1939 | 5.7%
Ola Honningdal Grytten, “Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment,” p. 13.
So overall one would have to say that government intervention added recovery to some extent (via monetary policy and banking stabilisation), but also international trade helped. Fiscal stimulus was either too mild or just neutral: it needed to be much larger.

10. Sweden
Real GDP in Sweden, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 22 293 |
1929 | 23 651 | 6.09%
1930 | 24 138 | 2.05%
1931 | 23 268 | -3.60%
1932 | 22 641 | -2.69%

1933 | 23 076 | 1.92%
1934 | 24 834 | 7.61%
1935 | 26 418 | 6.37%
1936 | 27 949 | 5.79%
1937 | 29 272 | 4.73%
1938 | 29 759 | 1.66%
1939 | 31 813 | 6.90%
1940 | 30 873 | -2.95%
1941 | 31 395 | 1.69%
1942 | 33 309 | 6.09%
1943 | 34 789 | 4.44%
1944 | 35 972 | 3.40%
1945 | 36 947 | 2.71%
(Maddison 2003: 51).
From 1931 to 1932, there was a real output loss of 6.20%.

11. Finland
Real GDP in Finland, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 9 194 |
1929 | 9 302 | 1.17%
1930 | 9 194 | -1.16%
1931 | 8 970 | -2.43%
1932 | 8 932 | -0.42%

1933 | 9 526 | 6.65%
1934 | 10 606 | 11.33%
1935 | 11 059 | 4.27%
1936 | 11 807 | 6.76%
1937 | 12 478 | 5.68%
1938 | 13 123 | 5.16%
1939 | 12 561 | -4.28%
1940 | 11 909 | -5.19%
1941 | 12 299 | 3.27%
1942 | 12 337 | 0.30%
1943 | 13 756 | 11.50%
1944 | 13 762 | 0.04%
1945 | 12 963 | -5.80%
(Maddison 2003: 50).
Real GDP loss from 1930 to 1932 was 3.97%.

12. United Kingdom
Real GDP in the UK, 1928–1945
* in millions of international Geary-Khamis dollars
1928 | 244 160 |
1929 | 251 348 | 2.94%
1930 | 249 551 | -0.71%
1931 | 236 747 | -5.13%

1932 | 238 544 | 0.75%
1933 | 245 507 | 2.91%
1934 | 261 680 | 6.58%
1935 | 271 788 | 3.86%
1936 | 284 142 | 4.54%
1937 | 294 025 | 3.47%
1938 | 297 619 | 1.22%
1939 | 300 539 | 0.98%
1940 | 330 638 | 10.01%
1941 | 360 737 | 9.10%
1942 | 369 721 | 2.49%
1943 | 377 807 | 2.18%
1944 | 362 983 | -3.92%
1945 | 347 035 | -4.39%
(Maddison 2003: 51).
Real GDP loss from 1930 to 1931 was 5.80%.


BIBLIOGRAPHY

Bukey, E. B. 2000. Hitler’s Austria: Popular Sentiment in the Nazi Era, 1938–1945. University of North Carolina Press, Chapel Hill, North Carolina.

Gerlich, P. and D. Campbell, 2000. “Austria: From Compromise to Authoritarianism,” in D. Berg-Schlosser and J. Mitchell (eds). The Conditions of Democracy in Europe, 1919–39: Systematic Case Studies. Macmillan, Basingstoke. 40–58.

Grytten, Ola Honningdal. “Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment,” online.

Kirk, Tim. 2002. Nazism and the Working Class in Austria: Industrial Unrest and Political Dissent in the National Community. Cambridge University Press, Cambridge.

Maddison, Angus. 1982. Phases of Capitalist Development. Oxford University Press, Oxford.

Maddison, Angus. 2003. The World Economy: Historical Statistics. OECD Publishing, Paris.


13 comments:

  1. I am from Norway, we had 10 years of deflationary policy(1921-1933) based on constitutional political correctness of a gold standard and austrian classical liberal ideology. After that we had fixed exchange rates towards sterling, based on the gold-exchange standard.

    We had an amazing growth path afterwards until world war 2.

    Austrians vindicated ?

    ReplyDelete
    Replies
    1. I will add this above to the section on Norway:

      Norway abandoned the gold standard in 1931 and implemented a loose and stimulative monetary policy, helping banks and apparently preventing financial collapse. A severe and prolonged deflation was avoided and moderate inflation resulted. This must have averted a debt deflationary collapse (though I do not know to what extent excessive private debt was an issue in the Norwegian economy). The end to the gold standard also allowed a currency depreciation, which stimulated export-led growth and import substitution.

      Ole Colbjørnsen and Ragnar Frisch proposed a strongly Keynesian policy to revive the economy around 1933-1934, but I do not know to what extent it was actually implemented.

      Some quick research seems to indicate that from 1935 under Johan Nygaardsvold the Norwegian government engaged in some mild Keynesian fiscal stimulus, though other economists deny this.

      Apparently, the Nygaardsvold government did implement welfare measures and the economy revived from export-led growth (to a considerable extent driven by German demand for Norwegian goods) after 1935.

      Although government spending rose, it appears to have been covered by tax increases.

      One suggestion has been that tax policy took in a certain amount of money that was not being spent on capital goods investment or consumption, and hence that government spending was stimulative to some degree, but other scholars dispute this:

      "There was a significant growth in the public sector. However, this increase was levelled out by higher taxes. Thus, in this respect, the net effect on demand was neutral. On the other hand, the marginal propensities to consume and save differed from the public to the private sector. Empirical evidence from Norway reflects that the marginal propensity to consume was higher in the public sector than in the private. Thus, [ceteris paribus] ... the relative growth in the public sector had a positive impact on demand. Nevertheless, due to budget discipline and moderate multiplier effects the fiscal policy in Norway under the Labour Party rule in the 1930s was neutral. In sum, fiscal policy seems to have played a minor, if any, role for the relative good performance of the Nordic economies during the 1930s.

      Ola Honningdal Grytten, Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment, p. 18.

      Moreover, the data indicates that Norway had a serious unemployment problem right up to the war:

      Year | Unemployment rate
      1920 | 1.7
      1921 | 6.8
      1922 | 7.5
      1923 | 5.6
      1924 | 4.2
      1925 | 5.7
      1926 | 8.7
      1927 | 8.9
      1928 | 7.9
      1929 | 7.0
      1930 | 7.0
      1931 | 10.2
      1932 | 10.6
      1933 | 10.8
      1934 | 10.3
      1935 | 9.9
      1936 | 8.7
      1937 | 7.3
      1938 | 6.8
      1939 | 5.7
      Ola Honningdal Grytten, Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment, p. 13.
      ---------------

      So overall one would have to say that government intervention added recovery to some extent (via monetary policy and banking stabilisation), but also international trade helped.

      Fiscal stimulus was either too mild or just neutral: it needed to be much larger.

      Some research on unemployment here:

      O.H. Grytten and C. Brautaset 2000, ‘Family Households and Unemployment in Norway During Years

      Ola Honningdal Grytten, Why was the Great Depression not so Great in the Nordic Countries? Economic Policy and Unemployment, online

      Delete
    2. "This must have averted a debt deflationary collapse (though I do not know to what extent excessive private debt was an issue in the Norwegian economy)."

      It was a huge issue, it lasted generally throughout the 1920s. Norway had a deliberate deflationary parity policy from 1920-1928 right after having a creditboom having that started when they left the gold standard during World War I.

      "Ole Colbjørnsen and Ragnar Frisch proposed a strongly Keynesian policy to revive the economy around 1933-1934, but I do not know to what extent it was actually implemented."

      No, they were considered fringe "socialists". It was after the war that their policy was implemented.

      "So overall one would have to say that government intervention added recovery to some extent (via monetary policy and banking stabilisation)"

      Yes, most Norwegian economists believe that going off gold and stabilizing against the pound in 1933 helped the economy, the evidence being growing GDP and unemployment.

      It has some relevance since the UK was among others a big export market.

      Still, the deflationary phase had to large extent changed the production structure into a more sustainable manner. Country, and local industry flourished as resources was not flowing to what was previously the biggest speculative bubble in Norwegian history.

      There are numbers and qualitative information to argue the latter.

      Delete
    3. " as resources was not flowing to what was previously the biggest speculative bubble in Norwegian history."

      What asset bubble was this?

      Delete
    4. Jan: "Technological Waves and Economic
      Growth - Sweden in an International
      Perspective 1850-2005 Schön, Lennart, Lund University-Paper no. 2009/06"
      http://www.circle.lu.se/upload/CIRCLE/workingpapers/200906_Schoen.pdf

      Delete
    5. Jan:"Historicalstatistics.org
      Portal for Historical Statistics

      Historicalstatistics.org is a portal for historical statistics, with the main focus on macroeconomic data on Sweden in the 19th and 20th centuries. Series are presented, for example, on GDP, inflation, employment, interest rates, exchange rates, population, money supply, capital stocks, worked hours, wages, profit rates and business cycle indicators.

      Below are also links to both Swedish and international data on historical statistics.

      The portal has received research support from Stockholm University (Department of Economic History) for cooperation with the surrounding society."
      http://www.historicalstatistics.org/"

      Delete
  2. http://ars.els-cdn.com/content/image/1-s2.0-S004727271100020X-gr2.jpg

    Shows Sweden Did Increase Spending, which is usually an indicator of Stimulus. Would explain the lower GDP.

    The Study concludes a greater role for the immigrants entering the Nordics, increasing labour supply for the greater unemployment. However, it grants the recovery in the Nordics to Demand side Policies.

    ReplyDelete
    Replies
    1. Jan: Incase of in Sweden there was a real hard crash in 1931-32 when the Match-King, Ivar Kreuger´s empire was laid in ruins.But the relativly good recovery was depended on the 1932 Socialdemocrat goverment fiscal stimulis and the fact that Sweden leaved the gold standard in 1931 and pegged the Krona to Brittish pound.It was in reality a devaluation of Swedish currency.Many of the leading economist was advocating similar contra cyclical policy as Keynes, like Gunnar Myrdal,Bertil Ohlin etc. Both Myrdal and Ohlin worked under minister of finance Ernst Wigforss that in 1932 manifesto advocated a Keynsian like fiscal policy.There was also mild protectionism and relative pragmatic monetary policy.

      Delete
    2. Those old statistic ain't telling the truth. Finland dropped gold standard also 1931 and started keynesian policies, but what i have read and heard 1/4 of finnish citys didn't keep any unemployment statistics back then and all short-time workers were involved in working forces and there was all kind goofing with statistic back then. Anyhow, they say that "Great Depression" started here before 1929 and quited 1932, beacuse of devaluation of mark.

      Greece and other PIIGS should also drop euro (gold standard) and start some smart monetary policies.

      Delete
    3. As it happens there is data on unemployment in Finland for the 1930s:

      Year | Unemployment Rate*
      * As Percent of Labor Force
      1929 4.1
      1930 5.8
      1931 6.7
      1932 8.4
      1933 7.6
      1934 6.4
      1935 5.4
      1936 3.9
      1937 3.8
      1938 3.8

      Delete
    4. Yes, but as i told you it is unreliable data. Finland was at that time almost like Somalia is now. We had had civil war and people didnt really like government or each other and didnt pay taxes or anything what would have shown in bookkeeping. Those statistic wont give you the whole truth, what people who lived back then have told for it. That might be also unrealiable, but I still prefer for it more than some foolish statistics. Anyway, it wasn't anything like in US or main Europe for us.

      The counting for uneployment was very different back then, than what it is now. There was example many farmers and farmers sons who didnt have anything to do, but they didnt count them to unemployment, even they were starving... and most finnish people then were farmers.

      Only thing what is worth knowing is that we dropped gold standard 1931 and started keynesian monetary system.

      Industrial development happened little bit later and then you can get some real data, when people really worked in factorys and for government, after WW 2.

      Delete
    5. We had had civil war ...

      I thought the Finnish civil war happened in 1918. As far as I am aware (I might be wrong), there was no civil war in Finland in the 1930s.

      Delete
    6. Yes, you are right, but there was really bad blood until second world war between red (poor fellows and communists, loosers) and white (elite, winners), all kind nasty things were going on - and little less after WW 2, but atmosphere was pretty intense at that time. You can't anyway compare those statistics to this day or make any real conclusions from those, cause espeacially gdp was a joke in stone age agriculture Finland and they didnt have any idea how to count unemployment rate. Companys didnt suffer too badly about this depression, but for many workers and farmers it was pretty shitty decade. No one has ever cared about little people so why should we now watch this about their perspective. Its most important that statistics looks good and companys makes profit.

      Delete