Swedish business cycles during the period of the gold standard 1873-1913

Abstract

This paper investigates and interprets the behavior of money, income and prices in Sweden during the period 1873-1913. The paper shows that: (i) the Swedish price level was very closely linked to the British price level; (ii) unanticipated movements in the price level - which were largely caused by international price shocks - played an important role in triggering output movements; (iii) the Swedish money stock was demand determined, as suggested by the monetary approach to the balance of payments; and (iv) the results are sensitive to the choice of the price index.