Understanding the Long Arc of Financial Crises in the Baltic and Nordic Region. Comparing Causes, Management and Consequences of Financial Crises in a Region.

Financial crises are phenomena that appear with certain regularity, but unpredictable cause and timing. As economic historians and economists we also know that its manifestation will vary. At the same time, as Mark Twain observed more than a century ago, while history may not repeat itself, it often rhymes. A better appreciation of history thus remains a vitally important way to learn about our present. The proposed project thus take the current global financial crisis in general and the recent Latvian financial crisis in particular as a point of departure for a novel comparative and longitudinal study of such crises in the Baltic-Nordic states (Estonia, Denmark, Finland, Iceland, Latvia, Lithuania, Norway and Sweden) during the last 100 years. In total some 20 individual crises will be covered. At the focus of attention is how the state chose to manage the various financial crises and thus how they distributed the direct and indirect costs connected to these crises, i.e. how the state helped pick the winners and losers of these recurring phenomena. In summary the project will analyse the following three aspects of financial crisis in the small Baltic- Nordic states: (i) the varying causes of financial crisis in terms of institutional set-up and financial market performance, (ii) the changing albeit central role of the state as a manager of financial crisis and the distributive effects of the choices made, and (iii) the longer-term consequences of financial crisis with regard to economic structure and trajectory.
Whereas a vast body of research on various aspects of financial crises has been built over the years and from different disciplines it may be argued that a contemporary and relevant research agenda to further our understanding of financial crises should pay very close attention to the (changing) role of the state in the management of these crises.
This comparative and longitudinal project offers to do so through a novel combination of explicit international comparison and sound empirical work in combination with a deep appreciation of theoretical and policy debates. Adding to this a cross-disciplinary research team that brings together competencies from the fields of economic and financial history, economic theory and (Eastern European) area studies will allow the project to add to our understanding to the focal point of the project, i.e. the role of the state before, during and after a financial crisis.

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Final report - Mikael Lönnborg - Understanding the Long Arc of Financial Crises in the Baltic and Nordic Region