The label Stockholm School refers to a group of Swedish economists who, between 1927 and 1939, developed dynamic methods for macroeconomic analysis.

The most prominent members of the school were Erik Lindahl (1891-1960), Gunnar Myrdal (1898-1987), Bertil Ohlin (1899-1979) and Erik Lundberg (1907-1987). Important contributions were also made by Alf Johansson (1901-1981), Dag Hammarskjold (1905-1961) and Ingvar Svennilson (1908-1972).

The school label came into international circulation through Ohlin’s “Some notes on the Stockholm theory of savings and investment” (1937), a critical review of Keynes’s General Theory (1936) from the vantage point of contemporaneous Swedish macro­economics. The article, published in the Economic Journal, was a reaction to the lecture “My grounds for departure from orthodox economic traditions” that Keynes had given at Stockholm in October 1936, on invitation from the local Political Economy Club (Henriksson 1991: 41). Half a century later, the club secretary remembered that:

[i]t was certainly a remarkable event when the great prophet came to Stockholm pretending that he had seen a new light, only to be taken down by the Swedish youngsters - Myrdal and Ohlin were around thirty-five, Hammarskjold thirty, Lundberg and Svennilson under thirty - who told him that he was rather old-fashioned, that the Swedish economists had gone much further, and that his, Keynes’s, very method, the equilibrium method, was unsuitable for the treatment of dynamic problems. (Cederwall 1991: 76)

In his article, Ohlin presented this critique as a coherent body of research that he named the “Stockholm school of thought” (1937: 57).

Most of Ohlin’s colleagues were quick to point out that they did not consider them­selves to be members of any school - “in the case of Gunnar Myrdal not of the same school as Bertil Ohlin at least” (Jonung 1991: 7) - and that Lindahl, the senior of the circle, was not based in Stockholm. Lundberg (1994: 491, original emphasis) observed that “[t]he view that the Stockholm School was and is a myth is, surely, generally accepted”. Yet, he also pointed out that “[e]ven a myth has its real base: the myth may become at least as real as reality itself” (ibid.). The following account of the Stockholm School’s development will demonstrate that, in spite of large differences between the approaches and positions of its members, there was enough common substance to warrant the school label. The chronological order of the main contributions coincides largely with the logical sequences in the development of dynamic methods and propos­als for macroeconomic stabilization policies (see Ohlin 1937; Hansson 1982; Lundberg 1996: 19-37).