The Business cycle has not been dampened: The case of Sweden and the United States 1873 – 1988

Abstract

The view that post-World War II stabilization policies have reduced economic fluctuations compared to earlier periods is widely held. This is particularly the case in Sweden, long the showcase of an “ambitious” economic policy aimed at stabilizing employment and output, as well as in the United States. In this study, we reexamine the Swedish and the U.S. evidence using a wide set of data. We conclude, contrary to conventional wisdom, that economic fluctuations in Sweden and in the United States have not been significantly dampened when comparing the pre-World War I period with the post-World War II war era.