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Is Switzerland in a Great Depression?

Author

Listed:
  • Timothy J. Kehoe

    (University of Minnesota)

  • Kim J. Ruhl

    (University of Texas, Austin)

Abstract

Abrahamsen, Aeppli, Atukeren, Graff, Müller and Schips (2005) object to Kehoe and Prescott's (2002) characterization of the Swiss economy as being in a great depression over the period 1974-2000. They argue that (1) depressions should be defined in terms of declines in labor productivity rather than in GDP; (2) examining deviations from trend in GDP is equivalent to examining levels; (3) Swiss data from the 1970s should be ignored because it is of low quality and because the 1970s were a period of turmoil in the Swiss labor market; (4) Swiss GDP data should be adjusted to account for appreciations in the terms of trade; and (5) the change in Swiss national accounts from a system based on SNA68 to one based on SNA93 will make Swiss economic performance look better. In this note, we find that none of these arguments have merit except for, possibly, the need to adjust GDP data for changes in the terms of trade. We conclude that Switzerland has indeed suffered a great depression and, in fact, is mired in it even today. (Copyright: Elsevier)

Suggested Citation

  • 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.
    • Handle: RePEc:red:issued:v:8:y:2005:i:3:p:759-775
    DOI: 10.1016/j.red.2005.03.003
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    References listed on IDEAS

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    1. Timothy Kehoe & Kim Ruhl, 2003. "Recent great depressions: Aggregate growth in New Zealand and Switzerland, 1973-2000," New Zealand Economic Papers, Taylor & Francis Journals, vol. 37(1), pages 5-40.
    2. Timothy J Kehoe & Kim J. Ruhl, 2003. "Recent Great Depressions: Aggregate Growth in New Zealand and Switzerland," Levine's Working Paper Archive 506439000000000529, David K. Levine.
    3. Timothy J. Kehoe & Edward C. Prescott, 2007. "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott.
    4. Brunner, Karl & Meltzer, Allan H., 1977. "Stabilization of the domestic and international economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 1-6, January.
    5. Kohli, Ulrich, 2004. "Real GDP, real domestic income, and terms-of-trade changes," Journal of International Economics, Elsevier, vol. 62(1), pages 83-106, January.
    6. 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.
    7. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 23(Win), pages 2-24.
    8. Lucas, Robert E., 1977. "Understanding business cycles," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 7-29, January.
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    4. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    5. 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.
    6. 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.
    7. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
    8. Jalil, Muaz, 2009. "Measuring Switzerland's Productivity Performance (1960-2008)," MPRA Paper 65321, University Library of Munich, Germany.
    9. 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.
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