The Power of the Exchange Rate: A Study of the Role of Exchange Rates in Economic Growth and Crisis Recovery in Denmark, Sweden and Finland 1985-2013

Abstract: Financial crises are recurring phenomena and studying how economic parameters affect outcome and recovery processes will most likely remain an area of intense research also in the years to come. The scope of this paper circulates around the causes and effects of two crises in the period 1985-2013 and their separate effects on the economies of Denmark, Sweden and Finland. Moreover, the main variable in focus is the exchange rate. Implications of different choices of exchange rate regime will be explored in detail. The research combines a theoretical study with simple econometrics in order to try to find support for some sort of causation or correlation between the choice of exchange rate regime and economic growth.