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

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Author Info

  • 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 Ships

    (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)

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File URL: http://dx.doi.org/10.1016/j.red.2004.06.003
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 8 (2005)
Issue (Month): 3 (July)
Pages: 749-758

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Handle: RePEc:red:issued:v:8:y:2005:i:3:p:749-758

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Related research

Keywords: Great depressions; Switzerland; labour productivity; national accounting standards; terms of trade adjustment; GDP per hours worked;

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References

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  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.
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Citations

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Cited by:
  1. Jochen Hartwig, 2006. "Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivitaet - dargestellt anhand eines Vergleichs der Schweiz mit den USA," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(4), pages 418-435, July.
  2. 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.
  3. Jochen Hartwig, 2005. "Sind unsere gesamtwirtschaftlichen Probleme überhaupt lösbar?," KOF Working papers 05-112, KOF Swiss Economic Institute, ETH Zurich.
  4. 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.

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