Financial Crises and Current Account Surpluses

Gylfi Zoega*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


The Nordic countries of Denmark, Finland, Norway and Sweden have had persistent current account surpluses in recent decades. While oil production set Norway apart, the emergence of the surpluses in Finland and Sweden coincided with a financial crisis in both countries and can be traced to a rise in national saving. These surpluses have persisted in the decades since the crisis. The same pattern can be seen in Iceland after its financial crisis in 2008-2009 when national saving increased, generating persistent current account surpluses for the first time in the history of that country. Other crisis countries in 2008 shared Iceland’s current account deficits in the years before the crises and surpluses in the years afterwards. This applies to the Baltic countries of Latvia, Estonia, Lithuania, Greece, Spain and Portugal. A similar development occurred in the Southeast Asian countries that had a financial crisis in the late 1990s. The causes of the rise in saving following financial crisis are not clear but could include more cautious bankers or increased risk aversion by households. Policy makers are also likely to avoid running deficits to reduce the risk of future crises.

Original languageEnglish
Pages (from-to)159-172
Number of pages14
JournalAtlantic Economic Journal
Issue number2
Publication statusPublished - Jun 2021

Bibliographical note

Funding Information:
This paper is prepared for the 91st International Atlantic Economic Conference in Europe, 19-22 May, 2021. The author would like to thank Lars Jonung, Fredrik N.G. Andersson and Robert McCauley for comments and suggestions.

Publisher Copyright:
© 2021, International Atlantic Economic Society.

Other keywords

  • Current account
  • E21
  • E42
  • Financial crises
  • Savings


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