Mark Sadowski recently “challenged” Scott Sumner to do a graph of Polish NGDP:
Scott,
But why this focus on Sweden, Denmark and Finland? Finland is not even an Indo-European language speaking country. Would it kill you to insert a graph of NGDP for Poland? A country who’s language actually resembles Swedish or Danish?Or is the graph to disturbing for you to produce?
I take up Sumner´s post and include Polish data. To focus on the more recent period that includes the “crisis”, all the GDP data (from the OECD database) are indexed to January 2005.
The first two pictures compare NGDP and RGDP, respectively, in Sweden and Denmark. Sweden has “exchange rate freedom”, while Denmark, although not a euro country is tied to the euro (ERM). The third figure shows that it surely seems that having the option of devaluing is positive for the economy´s performance. The exchange rates are effective nominal rates from the BIS – measured as a weighted average of a broad set of bilateral exchange rates. 
The next two pictures compare NGDP and RGDP in Sweden and Poland. Both have the “devalue option” but it appears that other factors also had an effect on the “awesome” performance of Poland, which cannot be explained solely by the fact that Poland devalued more than Sweden. 
Mark, it´s up to you to come up with reasons for the Swedish/Polish differential performance!
Historinhas 
Marcus,
First of all, I want to thank you for this post. Finally Poland gets the attention for her sound monetary policy during the Great Recession that she deserves!
Secondly, the graphs are even more impressive than I had ever imagined. Sweden looks pathetic compared with Poland’s slight adjustment in growth rate of both NGDP and RGDP. What was a earthquake in Sweden was merely a barely perceptible reduction in velocity for Poland.
Third, with respect to your question, I disagree with you very strongly. I have a similar graph on exchange rates for all the flexible exchange rate members of the EU handy. But I set the start date to July 2008 because that was the beginning of the rapid devaluation for most of those countries. Between July 2008 and February 2009 Sweden depreciated 13.3% relative to the euro. This was more than the UK, but less than the Czech Republic, Hungary, Poland or Romania.
Poland depreciated 29.9% with respect to the euro, much more than any of these countries, and more than twice as much as Sweden. So, in my view it is not at all a mystery why Poland vastly outperformed Sweden. The NBP acted like a near perfect shock absorber in this crisis and Poland escaped with only a slight slowdown in growth and a modest (and perhaps welcome) disinflation.
Again, thank you so much for this post! It has made my day and probably my week.
Mark. You´re welcome. There was mistake (repeated NGDP graph for Poland/Sweden) which has been corrected.
Yes, I see. But that only makes the difference even greater.
In any case, from a monetary policy standpoint it is the NGDP graph that matters most. In contrast to Sweden, Poland’s NGDP is smooth as a baby’s bottom.
Hi,
RGDP chart for Poland vs. Sweden is missing (NGDP chart is repeated instead)
Tks.It´s been corrected.
This post is terrible for us, the inhabitants of euroland! But Poland had very good government and governor of its Central Bank. I´m affraid that “real politik” will not allow this “breaking ranks” any more.
Luis: So lets hope there are no more occasions like the recent one
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