Working Paper: CEPR ID: DP1087
Authors: Nicholas F. R. Crafts; Terence C. Mills
Abstract: This paper examines growth in output per person in 17 OECD countries from the late nineteenth century to 1989 considering the possibility of several breaks in trend. In all cases the unit root hypothesis is rejected in favour of a segmented trend stationary alternative. 1951-73 is shown to be an epoch of exceptionally rapid economic growth in Western Europe and this seems to result both from catch-up and from reconstruction. With one exception, recent income levels in Western Europe are found to be higher than would have been expected on the basis of extrapolating the pre-1914 trend growth rate.
Keywords: economic growth; segmented trend; unit root
JEL Codes: C32; O47; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1951 to 1973 (I00) | exceptionally rapid economic growth in Western Europe (O52) |
| catch-up growth and post-war reconstruction efforts (H56) | exceptionally rapid economic growth in Western Europe (O52) |
| recent income levels in Western Europe (O52) | higher than expected based on pre-1914 growth rates (N13) |
| null hypothesis of constant trend growth rejected (C12) | segmented trend model (C32) |
| reconstruction followed by a return to normal growth (O41) | valid for most countries (F53) |
| slowing of growth during the 1950s (N12) | supported for five countries (O57) |
| golden age of growth in early postwar Europe (O52) | characterized by higher output per person relative to historical trends (O49) |
| significant economic recovery following disruptions of the World Wars (N14) | higher output per person (O49) |