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The Swiss Disease: Facts and Artefacts, A Reply to Kehoe and Prescott

Author

Listed:
  • Yngve Abrahamsen

    (Swiss Federal Institute of Technology-Zurich)

  • Roland Aeppli

    (Swiss Federal Institute of Technology-Zurich)

  • Erdal Atukeren

    (Swiss Federal Institute of Technology-Zurich)

  • Michael Graff

    (Reserve Bank of New Zealand)

  • Christian Müller

    (Swiss Federal Institute of Technology-Zurich)

  • Bernd Schips

    (Swiss Federal Institute of Technology-Zurich)

Abstract

This paper investigates the claim made by Kehoe and Prescott (2002) that Switzerland and New Zealand experienced 'great depressions' in the last two decades. We question the appropriateness of the measure used by Kehoe and Prescott (GDP per working-age person) and propose a more accurate measure to compare economic performance on a consistent basis, namely, GDP per hour worked which is also adjusted for terms of trade changes and investment in tangibles. Based on this yardstick, the difference in economic performance between the US and Switzerland turns out to be largely a statistical artefact and Kehoe and Prescott's conditions for a 'great depression.' (Copyright: Elsevier)

Suggested Citation

  • Yngve Abrahamsen & Roland Aeppli & Erdal Atukeren & Michael Graff & Christian Müller & Bernd Schips, 2005. "The Swiss Disease: Facts and Artefacts, A Reply to Kehoe and Prescott," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 749-758, July.
    • Handle: RePEc:red:issued:v:8:y:2005:i:3:p:749-758
    DOI: 10.1016/j.red.2004.06.003
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    References listed on IDEAS

    as
    1. Timothy J. Kehoe & Edward C. Prescott, 2002. "Great Depressions of the Twentieth Century," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 1-18, January.
    2. Timothy J. Kehoe & Edward C. Prescott, 2007. "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. International Monetary Fund, 2006. "Spain: Selected Issues," IMF Staff Country Reports 2006/213, International Monetary Fund.
    2. Yannic Stucki & Jacqueline Thomet, 2021. "A neoclassical perspective on Switzerland’s 1990s stagnation," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 157(1), pages 1-26, December.
    3. Stefan Leist, 2013. "Driving Forces of the Swiss Output Gap," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(IV), pages 493-531, December.
    4. Jochen Hartwig, 2005. "Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivität - dargestellt anhand eines Vergleichs der Schweiz mit den USA," KOF Working papers 05-100, KOF Swiss Economic Institute, ETH Zurich.
    5. Michael Siegenthaler, 2015. "Has Switzerland Really Been Marked by Low Productivity Growth? Hours Worked and Labor Productivity in Switzerland in a Long-run Perspective," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 353-372, June.
    6. Timothy J. Kehoe & Kim J. Ruhl, 2005. "Is Switzerland in a Great Depression?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 759-775, July.
    7. De Vroey Michel R & Pensieroso Luca, 2006. "Real Business Cycle Theory and the Great Depression: The Abandonment of the Abstentionist Viewpoint," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-26, November.
    8. Jochen Hartwig, 2005. "Sind unsere gesamtwirtschaftlichen Probleme ueberhaupt loesbar?," KOF Working papers 05-112, KOF Swiss Economic Institute, ETH Zurich.
    9. Hartwig Jochen, 2006. "Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivität - dargestellt anhand eines Vergleichs der Schweiz mit den USA / Measurement Problems with Respect to Labour Productivity Growth -," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(4), pages 418-435, August.

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    More about this item

    Keywords

    Great depressions; Switzerland; labour productivity; national accounting standards; terms of trade adjustment; GDP per hours worked;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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