Four Chapters in Elgar Encyclopedia of Financial Crises

13 November 2024 09:18

Four Chapters in Elgar Encyclopedia of Financial Crises

The four chapters titled "The banking crisis in Norway 1987–1993", "The Great Depression in Norway", "The post-war depression in Norway in the early 1920s" and "The Norwegian monetary crisis in the mid-1920s" by Ola H. Grytten has been published in the book Elgar Encyclopedia of Financial Crises.

abstract: The banking crisis in Norway 1987–1993

This is a definition of the banking crisis in Norway 1987–1993 in the /Elgar Encyclopedia of Financial Crises/. Beginning with the 2008 global crisis in the United States, and particularly after the COVID-19 pandemic shook economies around the world, academics, practitioners, and other experts have become increasingly sensitised to the potential for financial and economic fragility to result in a systemic breakdown. Presenting a synopsis of lessons learnt from financial crises arising out of the 19th, 20th and 21st centuries, each entry examines a unique past issue to help to develop future outcomes, operating as a touchstone for further research.

read paper

abstract: The Great Depression in Norway

As a small, open economy, Norway was very vulnerable when the Great Depression of the 1930s hit Europe. Like in other European economies GDP and prices contracted significantly when unemployment and financial failures peaked. However, due to tight monetary policy during the 1920s, Norway experienced neither overheating and asset bubbles before the crises nor crashes after. Also, due to an early abandonment of gold redemption at par values of the Krone in September 1931, the central bank lowered the key interest rates and thereby contributed to increasing domestic demand, when currency depreciation made Norwegian products relative cheap in international markets. This contributed to an early and rapid recovery from the depression, despite persistently high unemployment rates.

read paper

abstract: The post-war depression in Norway in the early 1920s

During World War I, neutral Norway, like other countries, left the gold redemption of its currency and ran a strong inflationary policy to finance the consequences of the war and the money and credit stock increased by some 400 percent. At the same time supply fell dramatically due to the war. Hence, demand increased dramatically when supply decreased. In consequence, Norway experienced high general and asset inflation along with strong depreciation of its currency until the autumn of 1920. Then a significant boom caused by the abundance of money and credits was overturned by heavy depression with contracting production and prices. In the same way as the boom after the war was fueled by inflationary policy, the bust was made stronger by the switch to a deflationary monetary policy aiming at balance between demand and supply of the Norwegian currency, the krone.

read paper

abstract: The Norwegian monetary crisis in the mid-1920s

After six years of inflationary monetary policy during 1914–1920, Norwegian inflation rocketed, a huge trade deficit developed, and the Norwegian currency, the Krone, depreciated 50 percent to gold parity. In consequence, the central bank decided to run a tough deflationary policy aimed at restoring gold parity in line with policy aims given by the government and Parliament. The key interest rates were increased significantly at the same time as deflation hit the economy devastatingly. Hence, real wages increased dramatically, while domestic demand and foreign trade fell. In consequence, Norway suffered from a deep financial crisis with bank failures and huge negative effects for the real economy. Hence, during an international boom, the Norwegian economy experienced a considerable depression in the mid‐1920s.

read paper