Central Banking and Capitalist Variations: Understanding the Nordic Model Beyond the Fiscal-centric Approach

Since policymakers and scholars coined the term in the 1930s, the Nordic Model has often been considered to denote a homogeneous political entity in which the constituent countries are ostensibly interchangeable. As a result, seldom attention has been afforded to what fundamentally differentiates Denmark, Finland, Norway, and Sweden. By focusing on the role of central banks within each country, and the subsequent function of monetary policy, we show that each country bares far less similarities than has often been assumed in the literature. To examine the heterogeneity the Nordic model, we draw on a growth model perspective to demonstrate that beyond the prevailing ‘fiscal-centric’ accounts reside a variety of central banking operations that underlie the social democratic welfarism in each context. We show that these differences are brought to bear in how each country responded to the Global Financial Crisis and COVID-19, where a variegated array of monetary measures were employed to uphold their own distinct growth model. By accounting for the role of central banks within the Nordic Model, we propose that it is better understood as a series of models, drawing attention to the function of monetary policy within the growth models perspective in the political economy literature.