I have a new working paper with my friend and mentee Casey Pender of Carleton University. In this short paper, we revisit the performance of the Canadian economy during the two World Wars. Casey and I stand on the shoulders of Robert Higgs here to perform our work. We owe him a lot. The abstract is below and the paper is here on SSRN:
This paper provides a series of nominal non-war output for Canada during WWI and WWII and a novel estimated price deflator to account for wartime price controls. We argue that our nominal series, deflated by our price estimates, provides a superior indicator of welfare and general economic well-being during wartime than more traditional measures of real output. When looking at our series, we find that it is 11% lower than traditional measures in 1918 and closer to 30% lower in 1945. We also corroborate our finding with domestic private investment in Canada, which we show follows similar trends of decline during wartime relative to trend. We argue that this provides evidence against the idea of wartime prosperity and, more specifically, against the notion of WWII ending the Great Depression in Canada.