Abstract
This paper compares monetary and economic developments in Sweden and Finland during the period 1914-1939. Both countries experienced high monetary growth and high rates of inflation as a result of wartime events. At the return of peace, they were faced with a choice of either deflation or devaluation. Sweden chose deflation and Finland devaluation. This choice had a major impact on the path of the two economies in the 1920s and 1930s. Basically, Finland managed to avoid the depression that affected Sweden due to deflation in 1920-1923.