Header

UZH-Logo

Maintenance Infos

A small open economy in the Great Depression: the case of Switzerland


Rosenkranz, Peter; Straumann, Tobias; Woitek, Ulrich (2014). A small open economy in the Great Depression: the case of Switzerland. Working paper series / Department of Economics 164, University of Zurich.

Abstract

In historical accounts of the world economic crisis of the 1930s, Switzerland is known for its staunch defense of the gold standard and the rise of corporatist policies. Yet, so far, the literature has not discussed the implications of these two features. This paper tries to show how the combination of hard-currency policy and nominal rigidities introduced by corporatist policies proved to be fatal for growth. Estimating a New Keynesian small open economy model for the period 1926-1938, we show that the decision to participate in the Gold Bloc after 1933 at an overvalued currency can be identified as the main reason for the unusual long lasting recession and that price rigidities from 1931 to 1936 significantly slowed down the adjustment process.

Abstract

In historical accounts of the world economic crisis of the 1930s, Switzerland is known for its staunch defense of the gold standard and the rise of corporatist policies. Yet, so far, the literature has not discussed the implications of these two features. This paper tries to show how the combination of hard-currency policy and nominal rigidities introduced by corporatist policies proved to be fatal for growth. Estimating a New Keynesian small open economy model for the period 1926-1938, we show that the decision to participate in the Gold Bloc after 1933 at an overvalued currency can be identified as the main reason for the unusual long lasting recession and that price rigidities from 1931 to 1936 significantly slowed down the adjustment process.

Statistics

Downloads

33 downloads since deposited on 25 Jun 2014
10 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
06 Faculty of Arts > Institute of History
Working Paper Series > Department of Economics
Dewey Decimal Classification:900 History
330 Economics
JEL Classification:E12, E32, N14
Uncontrolled Keywords:Great Depression, Switzerland, New Keynesian Business Cycle Model
Language:English
Date:June 2014
Deposited On:25 Jun 2014 15:02
Last Modified:15 Aug 2017 12:33
Series Name:Working paper series / Department of Economics
Number of Pages:44
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp164.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

Download

Download PDF  'A small open economy in the Great Depression: the case of Switzerland'.
Preview
Filetype: PDF
Size: 710kB