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Baumol's Diseases: The Case of Switzerland

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  • Jochen Hartwig

Abstract

Nordhaus (2008) has developed a testing strategy for what he calls "Baumol's diseases", by which name he designates a number of by-products of structural change that are unwanted from an economic policy perspective. He finds that the U.S. economy is strongly affected by the "diseases". This paper applies Nordhaus's testing methodology to Swiss data. The results suggest that – unlike the U.S. – Switzerland is not affected by the most serious of the "diseases", namely the negative impact of structural change on economic growth.

Suggested Citation

  • Jochen Hartwig, 2010. "Baumol's Diseases: The Case of Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(III), pages 533-552, September.
  • Handle: RePEc:ses:arsjes:2010-iii-1
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    References listed on IDEAS

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    1. Oulton, Nicholas, 2001. "Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 605-627, October.
    2. Jochen Hartwig, 2009. "Trying to assess the quality of macroeconomic data: The case of Swiss labour productivity growth as an example," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2008(1), pages 37-61.
    3. 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.
    4. Zvi Griliches, 1998. "Productivity, R&D, and the Data Constraint," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 347-374 National Bureau of Economic Research, Inc.
    5. Gundlach, Erich, 1994. "Demand Bias as an Explanation for Structural Change," Kyklos, Wiley Blackwell, vol. 47(2), pages 249-267.
    6. Ernst R. Berndt & Charles R. Hulten, 2007. "Introduction to "Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches"," NBER Chapters,in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 1-14 National Bureau of Economic Research, Inc.
    7. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    8. Pugno, Maurizio, 2006. "The service paradox and endogenous economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 17(1), pages 99-115, January.
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    10. Nordhaus William D, 2008. "Baumol's Diseases: A Macroeconomic Perspective," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-39, February.
    11. Hartwig Jochen & Schips Bernd, 2005. "Verzerrungen von Konsumentenpreisindices und ihr Einfluss auf das „reale“ Wirtschaftswachstum – dargestellt am Beispiel der USA / Biases in Consumer Price Indices and Their Impact on „Real“ Economic G," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 225(4), pages 394-412, August.
    12. Sasaki, Hiroaki, 2007. "The rise of service employment and its impact on aggregate productivity growth," Structural Change and Economic Dynamics, Elsevier, vol. 18(4), pages 438-459, December.
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    Cited by:

    1. repec:spr:nathaz:v:93:y:2018:i:1:d:10.1007_s11069-018-3294-z is not listed on IDEAS
    2. Michael Graff & Massimo Mannino & Michael Siegenthaler, 2014. "The Swiss "Job Miracle"," KOF Working papers 14-368, KOF Swiss Economic Institute, ETH Zurich.
    3. Akinwande A. Atanda & Andrea K. Menclova & W. Robert Reed, 2016. "Is Health Care Infected by Baumol’s Cost Disease? Test of a New Model," Working Papers in Economics 16/33, University of Canterbury, Department of Economics and Finance.

    More about this item

    Keywords

    Baumol's disease; productivity growth; Switzerland;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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