A Crisis Not Wasted
A Crisis Not Wasted
Institutional and Structural Reforms Behind Norway’s Strong Macroeconomic Performance
This chapter makes the connection between the Norwegian boom—bust cycle and banking crises in the late 1980s and early 1990s, the succeeding institutional and structural reforms, and the strong macroeconomic performance and stability of the last two decades. Comparisons are made to rather similar development patterns in Sweden and Finland and to the somewhat different developments in Denmark. The authors highlight various reasons underlying the ability of the Norwegian political system to learn from previous mistakes and to reach the necessary consensus to determine the implementation of necessary reforms. While the recent literature on financial crises indicates that a recession accompanied by a banking crisis may well lead to a ‘lost decade’, like in Japan in the 1990s, no signs are found of such a lost decade in the three Nordic economies that suffered from systemic banking crises in the early 1990s.
Keywords: Nordic countries, welfare state, banking crises, economic reforms, institutional reforms, macroeconomic performance, economic policy, sovereign wealth fund
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