Overvalued: Swedish Monetary Policy in the 1930s

15 Pages Posted: 5 Dec 2017

See all articles by Alexander Rathke

Alexander Rathke

University of Zurich

Tobias Straumann

University of Zurich - Department of Economics

Ulrich Woitek

University of Zurich

Multiple version iconThere are 3 versions of this paper

Date Written: November 2017

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.

Suggested Citation

Rathke, Alexander and Straumann, Tobias and Woitek, Ulrich, Overvalued: Swedish Monetary Policy in the 1930s (November 2017). International Economic Review, Vol. 58, Issue 4, pp. 1355-1369, 2017, Available at SSRN: https://ssrn.com/abstract=3079103 or http://dx.doi.org/10.1111/iere.12254

Alexander Rathke (Contact Author)

University of Zurich ( email )

Zuerich, 8006
Switzerland

Tobias Straumann

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Ulrich Woitek

University of Zurich ( email )

Zürichbergstrasse 14
CH-8032 Zurich
Switzerland

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