On the SNB website, Lukas Heim and Christoph Kappeler explain the integration of the financial account, the international investment position and the Swiss financial accounts.
Tag Archives: Switzerland
“Corona und die Wirtschaft (Corona and the Economy),” Valor, 2020
Valor, 14 April 2020. PDF.
Short interview on the implications of the Covid-19 shock for businesses, pensions, government finances, and asset markets. Longer online interview and video.
Medical Specialist Condemns Swiss Covid-19 Preparations and Response
In Die Mittelländische Zeitung, a Swiss doctor criticizes Switzerland’s preparations and response to Covid-19. He points to
- Lack of preparation by political decision makers
- Misleading communication by federal health officials
- Their apparent lack of awareness of academic work on the topic
- Arrogance in Switzerland and the West vis-à-vis China and other far eastern countries
- Sensationalist scare mongering in the media
- Calls for systematic infection of groups that are less at risk
Informative as far as medical aspects are concerned. Not convincing when criticizing statistical approaches to grasping the problem. Questionable as far as ex-post validation of eight studies and calls for action are concerned.
“Wirtschaftspolitik angesichts von Covid-19: Lastenteilung, aber keine Preismanipulationen (Economic Policy Responses to Covid-19: Burden Sharing, But no Price Distortions),” ÖS, 2020
Ökonomenstimme, 3 April 2020. HTML. Shorter version published in NZZ.
The aggregate Covid-19 shock calls for transfers of the type a pandemic insurance would have brought about. But we must not distort relative prices. They have to reflect scarcity, to provide incentives to overcome it. (This applies within countries but also across.)
“Preise müssen sich frei bilden können (Prices Must Reflect Scarcity),” NZZ, 2020
NZZ, 2 April 2020. PDF.
The aggregate Covid-19 shock calls for transfers of the type a pandemic insurance would have brought about. But we must not distort relative prices. They have to reflect scarcity, to provide incentives to overcome it. (This applies within countries but also across.)
Switzerland Peps Up SMEs
How Switzerland peps up SMEs: Banks are encouraged to extend credit (at 0%). The treasury guarantees the loans. The SNB refinances banks and accepts the guaranteed loans as collateral. Fast and efficient. Eventually, some of these loans will turn into grants of course. But that’s ok; the first-best response to a shock with asymmetric effects does involve transfers if markets are incomplete.
Hospital Care in Switzerland and Germany
In the NZZ, Thomas Hürlimann reviews his experience as a patient in Swiss and German hospitals. Top: Stans, Prof. Dr. Bachmann. Flop: Baar, Berlin Friedrichshain.
“Die SNB schuldet den Pensionskassen nichts (Nothing the SNB Owes to Pension Funds),” NZZ, 2019
NZZ, March 13, 2019. PDF. Updated: Ökonomenstimme, March 22, 2019. HTML.
- Long-term real interest rates do not reflect monetary policy.
- In the recent past, monetary policy has contributed to lower fixed-income interest rates but also to higher returns on other asset classes.
- Complaining about low rates but not adjusting one’s portfolio makes little sense; there is no “financial repression.”
- If politicians want to subsidize pension funds they should contribute funds from the government budget rather than asking the central bank to contribute.
- Larger and earlier SNB dividend payouts to the government may not be in the government’s interest.
Swiss-German Media Quality
Two recent articles critically reflect on the quality of journalism in German speaking news, specifically in Switzerland. In the NZZ, Stephan Russ-Mohl reports about a study according to which in Switzerland, only 42 professors out of a sample of 1100 are regularly interviewed; they provide about half of the publicized statements. (In total, there are about 5500 professors in Switzerland.)
Eine Vielfalt wissenschaftlicher Stimmen gibt es in der Medienarena nicht: Von den 1100 der rund 5500 Professoren in der Schweiz, welche die Zürcher Forscher in ihrer Stichprobe erfasst haben, sind es ganze 42, die regelmässig von den Medien als Experten befragt werden und rund 50 Prozent aller Statements bestreiten. Die drei meistzitierten Medienstars der Schweizer Forscher sind Michael Hengartner (Molekularbiologe und Rektor der Universität Zürich), Michael Ambühl (Experte für Verhandlungsführung und Konfliktmanagement, ETH Zürich) und Kathrin Altwegg (Astrophysikerin, Universität Bern). Die meistgenannten Forschungsinstitutionen sind die Universität St. Gallen und das Hochschulinstitut für internationale Studien und Entwicklung in Genf.
In the NZZaS (other link), columnist Beat Kappeler explains that he has found it a waste of time to follow Swiss German radio, TV, or newspapers other than the NZZ. He argues that most German speaking news outlets lag the Financial Times and other Anglo-Saxon media by months or even years.
Ich habe bewusst in den letzten 40 Jahren nie TV geschaut, nie das deutschsprachige Schweizer Radio gehört, keine Deutschschweizer Presse gelesen ausser der NZZ …
[weil die angelsächsischen Quellen] mindestens drei Monate oder drei Jahre [voraus sind] …
Ihre Medien sind interessanter, kreativer und oft unkonventioneller. Die vielgekauten Themen Deutschlands und oft auch der deutschen Schweiz sagen mir nicht zu.
Negative Value Added of Switzerland’s Agricultural Sector
Farmers in Switzerland receive about CHF 2.7 billion in direct financial support annually. Total financial support by the federal and cantonal governments equals more than CHF 4 billion. But according to a report published by Zurich based think tank Avenir Suisse, this financial support constitutes just a minor part of the transfers from society at large to farmers, due to explicit and implicit subsidies, privileges, and—most importantly—negative externalities.
A list of privileges compiled by Avenir Suisse.
Avenir Suisse estimates the value added of Swiss agriculture to be hugely negative.
Die heutige Schweizer Landwirtschaft resultiert in einer negativen Wertschöpfung von minus 15,8 Mrd. Fr. pro Jahr. Damit kostet sie uns umgerechnet rund 1,8 Mio. Fr. pro Stunde.
In the NZZ, Nicole Rütti reports.
How Switzerland Became Multilingual
In the NZZ, Christophe Büchi reports how Switzerland became a multilingual country. Immigration occurred in waves; sometimes the immigrants adjusted more, sometimes less.
“Vollgeld – Was spricht dagegen? (Sovereign Money—What are the Problems?),” RABE, 2018
Radio Bern RaBe, May 15, 2018. HTML with link to podcast (interview starts at 08:15).
- Interview with Radio Bern RaBe about Vollgeld and the Vollgeld initiative.
“Was Vollgeld bringt – und was nicht (Sovereign Money—Pluses and Minuses),” SRF, 2018
SRF, April 28, 2018. HTML with link to audio file (interview starts at 13:15).
- Interview with Swiss public radio about Vollgeld and the Vollgeld initiative.
AXA Stops `Vollversicherung’ Model
In the NZZ, Werner Enz reports that the insurance company AXA will stop offering “Vollversicherungen.” One motivation relates to the fact that the second pillar in the Swiss pension system is increasingly abused, with redistribution undermining supposedly “individual” accounts.
“Elektronisches Zentralbankengeld hat Vorteile (Benefits of `Reserves for All’),” finews, 2018
U.S. Tax Enforcement and Offshore Accounts
In an NBER working paper, Niels Johannesen, Patrick Langetieg, Daniel Reck, Max Risch, and Joel Slemrod discuss the effects of recent U.S. tax enforcement initiatives on tax compliance. They offer background information about U.S. initiatives since 2009 and conclude, based on administrative microdata, that
[e]nforcement caused approximately 60,000 individuals to disclose offshore accounts with a combined value of around $120 billion. Most disclosures happened outside offshore voluntary disclosure programs by individuals who never admitted prior noncompliance. The disclosed accounts were concentrated in countries whose institutions facilitate tax evasion. The enforcement-driven disclosures increased annual reported capital income by $2.5-$4 billion corresponding to $0.7-$1.0 billion in additional tax revenue.
SIX Group, Reserves for All
In the FT, Ralph Atkins reports that Romeo Lacher, Chairman of SIX group, supports the idea of Switzerland introducing an ‘E-Franc.’
Konstanz and Kreuzlingen
In the NZZ,
Shoppers have been crossing the border for ages although governments have tried to prevent this with varying fervor. Exchange rate regimes have affected which goods are bought, where.
Inequality in Switzerland
In a paper, Reto Föllmi and Isabel Martínez document trends in income and wealth inequality in Switzerland over the last 100 years.
Daniel Hug reports in the NZZaS (figures below taken from NZZaS).
Data (World Wealth and Income Database, based on tax records).
Some findings:
- Income inequality has been rather stable and is modest …
- … although social mobility as reflected in educational attainment is low.
- Income inequality at the very top has increased.
- The top 1% of income recipients earn at least CHF 300 000 annually (net income before tax), the top 0.01% at least CHF 4 million.
- Wealth is distributed much more unequally. The top 1% own roughly 40%, slightly more than in the United States and twice as much as in France and the UK.
- The wealth distribution is more equal if retirement savings in the second and third pillar are accounted for. PAYG funded pensions (first pillar) also contribute towards reducing inequality after taxes and transfers, much more so than taxes.
Swiss Perfectionism
In Der Bund, Adrian Sulc comments on the Swiss National Bank’s perfectionism.
Keine andere Schweizer Organisation kommuniziert so professionell wie die SNB, keine andere Organisation kann so gut dichthalten.
Perfectionism is costly.
Der Personalbestand ist in den letzten fünf Jahren um 18 Prozent auf 795 Vollzeitstellen gestiegen. … Die durchschnittlichen Lohnkosten pro Mitarbeiter betragen mittlerweile 155 000 Franken pro Jahr. Dies weil gemäss Nationalbank fast ausschliesslich Spezialisten aus Wirtschaft und IT eingestellt wurden.
The Lifespan of Constitutions
The comparative constitution’s project shows timelines of the world’s constitutions. Japan’s constitution appears as one of the most stable ones, Switzerland’s doesn’t.
Liechtenstein: Role Model or Worse?
In the NZZ, Simon Gemperli argues that Liechtenstein is doing better than Switzerland.
Swiss tabloid Blick criticizes Liechtenstein. Previous, more positive NZZ articles about Liechtenstein: May 2014; March 2016; November 2016; April 2017.
Federalism Trends in Switzerland
In the NZZ,
- Legislation has become more centralized.
- Implementation less so. Cantons increasingly implement federal legislation.
- But decentralized authority to collect taxes has remained largely in place.
Figure from the NZZ:
Switzerland’s Changing International Linkages
In a CEPR discussion paper, Cedric Tille argues that Switzerland’s international linkages have been transformed over the last decade. Abstract:
Over the last decade, the economic linkages between Switzerland and the rest of the world have been transformed. First, merchanting and the chemical industry account for an increasing share of international trade, with chemicals exports expanding robustly in recent years despite the European crisis and the strong Swiss franc. Second, the nature of international financial integration has changed. While private investors drove Switzerland’s financial flows and net foreign assets before the financial crisis, the foreign reserves accumulation by the Swiss National Bank has been playing a major role since. Third, asset prices and foreign exchange movements led to substantial capital losses in foreign assets which fully absorbed the surplus on the current account. Finally, the crisis has weakened the role of foreign trade as an engine of growth and narrowed it across sectors.
“Die Vollgeld-Initiative und eine Alternative (The Swiss Sovereign Money Initiative, and an Alternative),” SNB, 2017
In: Thomas Moser, Carlos Lenz, Marcel Savioz and Dirk Niepelt, editorial committee, Monetary Economic Issues Today, Festschrift in Honour of Ernst Baltensperger, Swiss National Bank/Orell Füssli, Zürich, June 2017. PDF of draft.
The sovereign money initiative (Vollgeldinitiative) seeks to gain greater control over the money and credit supply, to increase financial stability and to achieve a fairer distribution of seigniorage income. The initiative’s suggested approach – a ban on active money creation – is inefficient and may even prove ineffective, as it fails to address the core problems. A variant of the initiative, which would allow the public access to electronic central bank money on a voluntary basis, would offer greater benefit at lower cost.