Daniel Auer, Johannes Kunz, 10 May 2022

Existing research on the integration of refugees has focused on the impact on the refugees themselves. This column uses the random allocation of refugees in Switzerland to show how allocation has significant effects even on future generations. Compared to children of refugees allocated to regions with an unfamiliar language, the children of mothers allocated to a familiar language environment have a higher birth weight on average, which is a predictor of outcomes including educational attainment, income, and health later in life. 

Pascal Seiler, 12 March 2022

Until recently, central banks such as the ECB and the Swiss National Bank considered the current rise in inflation to be temporary, albeit more persistent than expected. This column uses survey data from Switzerland and a quasi-experimental research design to show that companies’ long-term inflation expectations have increased significantly following Russia’s invasion of Ukraine, especially in manufacturing. In this sector, higher energy and commodity prices prove particularly important in motivating price increases. These findings add to concerns about de-anchored inflation expectations and, as a result, more persistent inflationary pressures.

Raphaël Parchet, Frédéric Robert-Nicoud, 15 October 2021

The development of the Swiss highway network from 1960 to 2010 influenced the residential and job compositions of municipalities. The advent of an entrance/exit ramp within 10 km of a municipality caused a long-term 24% increase in the share of top-income taxpayers. The welfare gains of residents of connected municipalities relative to residents in non-connected municipalities range from only 2% for the low-income group to 12% for the top-income group. Highways also contributed to job and residential urban sprawl.

Rafael Lalive, Arvind Magesan, Stefan Staubli, 12 January 2021

Policymakers have used a variety of tools to preserve the solvency of social security systems. The life-cycle model of behaviour predicts that financial incentives will shape people’s decisions on when to claim their pensions and when to retire but this is debatable. This column examines a reform to women’s pensions in Switzerland to understand how people respond to different policy instruments. Most people do not claim their pension benefits at the age that the standard model of behaviour would predict. Instead, individuals are influenced by the full retirement age (which they consider ‘natural’) and the fear of losing benefits by claiming early.

Terhi Jokipii, Reto Nyffeler, Stéphane Riederer, 08 December 2020

 A growing body of literature has highlighted important flaws in the credit-to-GDP gap computed according to the BIS guidelines as a measure of excess credit for policy purposes. This column assesses the relevance of these critiques from the Swiss perspective. It finds no compelling evidence to suggest the need to deviate from using the BIS gap. However, authorities should be cautious in interpreting the gap’s signal, particularly during periods of large and strong GDP movements and during long-lasting boom phases and subsequent busts. Authorities should also consider strengthening their decision-making frameworks with additional credit relevant indicators.

Patrick Chuard, Veronica Grassi, 12 October 2020

Equal opportunities are not only ethically desirable but also important for economic growth, and one important facet is intergenerational income mobility. Using administrative data, this column documents intergenerational income and educational mobility in Switzerland. It finds that income mobility in Switzerland is high, but education depends strongly on parental income. It goes on to ask whether the country's vocational training and education system might be the primary reason for this ‘high income, low educational mobility’ conundrum. 

Florian Eckert, Heiner Mikosch, Markus Stotz, 31 August 2020

The corona crisis has hit the Swiss economy hard, with survey results showing that corporate profits and demand expectations collapsed and uncertainty about future business prospects has risen sharply. This column uses unique company bankruptcy data for Switzerland to assess the current bankruptcy trend using the concept of excess mortality. The corona crisis is not causing a wave of bankruptcies for the time being, but it is still too early to give the all-clear.

Christoph Basten, Steven Ongena, 15 August 2020

Recently, the debate around potential changes to financial intermediation with the introduction of new technology or FinTech has gained pace. Using data on bank responses to household mortgage applications through a Swiss web platform, this column contributes to the debate by showing how online platforms can allow smaller banks to expand to areas beyond their branch network. It finds enormous potential for web platforms to shake up local lending competition, open up new ways for geographical diversification, and facilitate automation of lending decisions.

Cédric Tille, 11 April 2020

The adoption of a debt brake rule in the late 1990s has led to a reduction of Swiss government debt. In fact, Switzerland seems to have a problem of too little debt. This column argues that instead of reducing its debt level further, which in the current configuration amounts to investing at a negative interest rate, Switzerland has several more appealing options.

Steven Ongena, Raphael Auer, 14 January 2020

Targeted macroprudential policies may spill across sectors, but this does not mean that they are ineffective. This column shows how the effects of a countercyclical capital buffer designed to curb house price growth in Switzerland spilled over into commercial lending. But a model that matches the uncovered spillovers in volumes and interest rates shows that they by no means undermine the rationale for focusing policy measures on specific sectors. On the contrary, it suggests that regulators can avail themselves of this new tool to increase the overall resilience of banks

Marius Brülhart, Jonathan Gruber, Matthias Krapf, Kurt Schmidheiny, 23 December 2019

Wealth taxes are in vogue, and academic research on the subject is picking up. Recent studies have produced widely diverging estimates of the elasticity of the wealth tax base. Some of this is due to methodological differences. This column analyses wealth taxes in Swiss cantons and shows that jurisdiction size and enforcement also play a role. When applied at the sub-national level and without third-party reporting, wealth taxes are particularly easily avoided.

Eric Golson, 11 November 2019

Neutrality has long been viewed as impartiality in war. This column, part of the Vox debate on World War II, asserts that neutral states in the war were realist in approaching their defence to ensure their survival. Neutrals such as Portugal, Spain, Sweden, and Switzerland maintained independence by offering economic concessions to the belligerents to make up for their relative military weakness. Economic concessions took the form of merchandise trade, services, labour, and capital flows. Depending on their position and the changing fortunes of war, neutral countries could also extract concessions from the belligerents, if their situation permitted.

Katharina Erhardt, Simon Haenni, 27 May 2019

Firm entry is widely viewed as a central driver of economic growth, so understanding the role of culture in explaining differences in entrepreneurial activity is important. Using Swiss data on individuals’ cultural origins going back to the 18th century, this column compares the entrepreneurial activity of individuals who live in the same municipalities but who have their cultural origins on different sides of the language border. It finds that individuals with ancestry from the German-speaking side founded 20% more firms than those with ancestry from the French-speaking side. Yet, the cultural origin of the founder does not affect firm-level outcomes such as bankruptcy or revenues.  

Alex Cukierman, 02 November 2018

The size and nature of an economy have a crucial influence on the measures that can be taken in response to major shocks. This column investigates the forex interventions taken by Switzerland and Israel – two small, open economies – in the wake of the Global Crisis. While discretionary interventions are shown to be preferable when policy rates are strictly positive, this is no longer valid when the effective lower bound is reached and unconventional monetary policy is called for. The transfer of reserve management to a sovereign wealth fund is also discussed. 

Beat Weber, 21 May 2018

On 10 June 2018, Switzerland will be the first country to have a referendum on the introduction of Sovereign Money ('Vollgeld'). This column argues that the Vollgeld project and cryptocurrencies such as Bitcoin build on popular fantasies about money that are disconnected from the actual operation of the current monetary system. Unfortunately, the latter’s features remain underexplored even among economists.

Philippe Bacchetta, 02 May 2018

The proposed Swiss sovereign money initiative, which will be put to a popular vote in June 2018, would be a drastic reform to the monetary system. If implemented, all sight deposits in Swiss francs would come off commercial bank balance sheets and be deposited at the Swiss National Bank. This column argues that the initiative ignores most of what we know about macroeconomics or monetary economics. It would generate an aggregate loss, reduce stability, interfere with fiscal and monetary policy, and undermine the independence of the central bank. 

Willem Thorbecke, Atsuyuki Kato, 01 July 2017

Since 2007, there have been large changes in the Swiss franc. This column shows that exchange-rate appreciations do not affect the exports, profits, or stock returns of Swiss companies making sophisticated products. In contrast, rises in the franc decrease the exports, profits and stock returns of firms producing medium-high-technology goods. An economy’s production structure is important for weathering exchange-rate fluctuations.

Stefan Gerlach, 05 June 2017

In many economies, inflation may have remained stubbornly low during the recovery because their Phillips curves have become flatter. This column uses an analysis of Swiss data since 1916 that support this argument. The most recent structural break in the Swiss Phillips curve occurred in 1994, when it became much flatter. Previous structural breaks suggest that this has been a change from an above-average to a below-average slope, not a collapse from the long-term normal level.

Jean-Pierre Danthine, 04 May 2016

Since the Eurozone Crisis a host of monetary and fiscal instruments have been used to try to reinvigorate growth and achieve financial stability, with mixed results. Basel III’s counter-cyclical capital buffer (CCB) is one such instrument which was met with scepticism. This column uses evidence from the Swiss economy to show that given the right circumstances and political will, the CCB can achieve financial stability.

Swati Dhingra, Thomas Sampson, 04 March 2016

In June, UK voters will decide whether to remain part of the EU. This column explores the UK’s options if a majority votes in favour of Brexit. One possibility is for the UK, like Norway, to join the European Economic Area and thereby retain access to the European Single Market. An alternative would be to negotiate bilateral treaties with the EU, as Switzerland has done. All options, however, involve a trade-off between political sovereignty and economic benefits.

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