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The Cost of Staying Out: Monetary Sovereignty and Sweden's Economic Performance in the 2008 Crisis
Jönköping University, Jönköping International Business School.
2026 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This thesis examines whether Sweden’s decision to retain the krona rather than adopt the euro affected its economic performance during the 2008 financial crisis. Using the synthetic control method, it constructs a counterfactual “euro-Sweden” as a weighted combination of the original euro-area economies and compares it with the actual, monetarily sovereign Sweden over the period 1999–2015, with particular attention to the crisis and recovery. Across both outcomes examined—real GDP per capita and the unemployment rate—Sweden outperformed its synthetic counterpart. Real GDP per capita exceeded the counterfactual by roughly 1,500 US dollars per capita before the crisis and by around 2,000 and 3,700 dollars during the acute and recovery phases respectively, while unemployment was approximately 0.9 percentage points lower during the crisis window. The advantage was thus a pre-existing premium that the crisis amplified rather than an effect created by it. A mechanism analysis attributes this pattern to the stabilisation tools that monetary sovereignty preserved: a krona depreciation of roughly twenty per cent that supported exports, an independent monetary policy calibrated to domestic conditions, and the fiscal space that the other channels left intact. Given the small number of comparison economies, the results are suggestive rather than statistically decisive, but they point consistently towards the value of an independent currency as insulation against an asymmetric shock, lending more support to Calmfors’s emphasis on monetary sovereignty than to Rose’s emphasis on integration gains.

Place, publisher, year, edition, pages
2026. , p. 30
Keywords [en]
synthetic control method, euro, monetary sovereignty, optimum currency area, 2008 financial crisis, Sweden
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-73516OAI: oai:DiVA.org:hj-73516DiVA, id: diva2:2091426
Subject / course
JIBS, Economics
Examiners
Available from: 2026-08-17 Created: 2026-08-11 Last updated: 2026-08-17Bibliographically approved

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bachelor thesis Otto Petersson(1466 kB)21 downloads
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CiteExportLink to record
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Citation style
  • apa
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