Stockholm School

The Stockholm school of economics, or Stockholmsskolan, is a modern economic philosophy that is distinctly different from the Austrian School in that it opposes the gold standard. The school of thought originated in the 1930s around Swedish economics professors Gunnar Myrdal and Bertil Ohlin. Many theories produced by the school could be considered to be Keynesian. In fact, both Keynes and Swedish economist were disciples of Knut Wicksell at around the same time.

Ohlin believed that economic contraction will result when investment falls below the volume of saving when in times of full employment. He believed that both aggregate income and employment levels will fall should this not be addressed with lower interest rates to stimulate investment.

The Keynes ties don’t end there. After Keynes released The General Theory of Employment, Interest, and Money, Swedish economist Bertil Ohlin basically sought to get the word out that he had come to similar conclusions. He wrote a credit-seeking article for the Economic Journal titled, Some Notes on the Stockholm theory of Savings and Investment. Gunnar Myrdal also jumped on board with similar ideas. He claimed that the idea of government intervention with both fiscal and monetary policy was first developed by him at the Stockholm school.

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