Recent great depressions: Aggregate growth in New Zealand and Switzerland, 1973-2000

Timothy J Kehoe, Kim J. Ruhl

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

Throughout the 1950s and 60s real GDP per working-age person in New Zealand and Switzerland grew at rates at or above the 2 percent trend growth rate of the United States. Between 1973 and 2000, however, real GDP per working-age person in both countries has fallen a cumulative 30 percent below the trend growth path. Our growth accounting attributes almost all of the changes in output growth to changes in the growth of total factor productivity (TFP), and not to changes in labor or capital accumulation. A calibrated dynamic general equilibrium model that takes TFP as exogenous can explain almost the entire decline in relative output in both New Zealand and Switzerland. To understand the recent growth experiences in New Zealand and Switzerland, it is necessary to understand why TFP growth rates have fallen so much.

Original languageEnglish (US)
Pages (from-to)5-40
Number of pages36
JournalNew Zealand Economic Papers
Volume37
Issue number1
DOIs
StatePublished - 2003

Bibliographical note

Funding Information:
For both New Zealand and Switzerland, data on nominal and real GDP, gross fixed capital formation, changes in inventories, exports and imports are from the OECD's National Account Statistics. The New Zealand data are presented in different systems of accounts for the period prior to 1960, the period spanning 1960-1970, and the period from 1970 onward. For Switzerland, the data change account systems only in 1970. In both cases, we join the series by ratio splicing. Data on Japan's GDP are from the Economic and Social Research Institute (http://www.esri.cao.go.jp/index-e.html). GDP data for the United States for the years 1970-2000 are from the International Monetary Fund's International Financial Statistics CD-ROM (IFS).

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