The Finnish Great Depression: From Russia with Love
- (pp. 1619-44)
AbstractWhy did Finland experience, in 1991-1993, the deepest recession observed in an industrialized country since the 1930s? Using a dynamic general equilibrium model with labor frictions, we argue that the collapse of the Soviet-Finnish trade was a major contributor to the contraction. Finland's experience mirrors that of the transition economies of Eastern Europe, which suffered similar deep recessions coupled with institutional changes. By focusing on the Finnish case, we isolate the effects of the Finnish-Soviet trade collapse and shed new light on the sources of recessions in transition economies.
Citation2012. "The Finnish Great Depression: From Russia with Love." American Economic Review, 102(4): 1619-44. DOI: 10.1257/aer.102.4.1619
- E32 Business Fluctuations; Cycles
- F14 Country and Industry Studies of Trade
- F41 Open Economy Macroeconomics
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, and Aid