Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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A Norwegian fixation: Explaining Cheap Money in Norway 1945–86.
Eivind Thomassen, Einar Lie

Last modified: 2014-03-10


For about 40 years from the end of WW2 Norwegian authorities maintained low and stable interest rates as one of their primary monetary policy goals. To achieve this, Norwegian governments built an elaborate system of regulations. From the 1960s, a period where financial repression was generally (however gradually) relaxed in most Western countries, Norway seemed to be moving in the opposite direction. In 1967, the OECD identified the Norwegian system as one of the most heavily regulated financial systems within the organization, comparing it to the systems of authoritarian Greece and Spain. The article explores the political economy of the Norwegian cheap money policies. Why was cheap money so persistent? Answers can be found in the specific Norwegian interwar experience. Also, the impact of the so-called Oslo School of economics, inspired by later Nobel laureate Ragnar Frisch, helped maintain academic preference for cheap money longer than in many other countries.