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The Nobel FactorThe Prize in Economics, Social Democracy, and the Market Turn$
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Avner Offer and Gabriel Söderberg

Print publication date: 2019

Print ISBN-13: 9780691196312

Published to Princeton Scholarship Online: May 2020

DOI: 10.23943/princeton/9780691196312.001.0001

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The Riksbank Endows a Nobel Prize

The Riksbank Endows a Nobel Prize

(p.89) Chapter 4 The Riksbank Endows a Nobel Prize
The Nobel Factor

Avner Offer

Gabriel Söderberg

Princeton University Press

This chapter shows how the Swedish economy during the mid-twentieth century aided in the formation of a Nobel Prize in economics. During the 1950s, the forces of sound money in Sweden had become restive. When inflation began to rise, the choice appeared to be between full employment and housebuilding on the one side, or price stability on the other. The Nobel Prize was an indirect and unintended outcome of this dilemma. Unlike most central banks between the wars, the Riksbank was the bank of Parliament and belonged to the nation. After the war, low interest rates were imposed by government on the bank (as in the United States and Britain). In Sweden, the main reason was to keep housing credit cheap. The central bank was made to purchase government and mortgage bonds.

Keywords:   Swedish economy, central banks, price stability, employment, housebuilding, Riksbank

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