Abstract
According to a growing number of critics, the process of financial liberalisation in the 1980s is to blame for the volatile macroeconomic development in a number of countries, including the U.K. and the Nordic economies. We examine how financial deregulation affected one important component of aggregate demand, private consumption. A main finding is that the Swedish consumption boom of the late 1980s can be explained along other lines than financial deregulation. The mid-1980s also constituted a period when real wage growth picked up, and our data are consistent with the simple idea that permanent income dynamics was an important factor.
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