Introduction

The aggregate growth of the Danish economy since the Second World War has followed the same broad pattern as experienced in most other European countries. The overall growth of the period has been close to the average of the European OECD countries, but the profile of growth has been somewhat different. The ‘Golden Age’ of high growth and extremely low unemployment began later in Denmark than in the rest of Western Europe. During most of the 1950s, growth remained below the OECD average. The golden period began in the late 1950s and ended in 1973 with the first round of oil price increases. Since then, the average growth rate of the Danish economy has once again been rather low. The postwar growth outside the golden period is more or less in line with the long-run trend in economic growth based on prewar experience. Thus, looked at from a very long-run perspective, the period from the late 1950s to the early 1970s stands out as historically exceptional years. This is the case both when we consider growth rates and when we consider the long-run experience of unemployment.

Around 1960 the Danish economy experienced a short spell of overall macroeconomic balance. The rates of unemployment and inflation were both low, and the current account as well as the public budget were in balance. In contrast to this, both the preceding and the subsequent years were characterized by persistent problems of macroeconomic balance, creating restraints on the actual growth of the economy.

A number of factors underlying the persistent problems in relation to the balance of payments, unemployment and inflation are discussed in more detail below.