Spillovers in the Nordic Countries

Denmark, Finland, Norway, and Sweden form a tightly integrated region which has strong tieswith the euro area as well as some exposure to Russia. Using the IMF's Global IntegratedMonetary and Fiscal model (GIMF), we examine spillovers the region could face, focusing onpossible scenarios from the rest of the euro area and Russia, and the fall in global oil prices. Weshow that the spillovers from these scenarios differ in magnitude and impact, regardless of thehigh degree of integration among the four Nordic economies. These differences are driven by thefact that Denmark and Finland have no independent monetary policy, and Denmark and Norwayare net energy exporters while Finland and Sweden are energy importers. We infer lessons forpolicy from the outcomes.