Estimates of real economic activity in Switzerland, 1886-1930

This paper uses annual data spanning 1870 to 1930 on a set of variables correlated with business conditions to construct an index of real economic activity in Switzerland. We extract an estimate of the common component of the data series using principal components analysis and the unobservable variables approach proposed by Stock and Watson (1989, 1991). The resulting index is similar to that constructed by Andrist et al. (2000) but displays more variation over time and is available for a longer time period. Moreover, it is less volatile and covers a longer time period in the 20th century than the estimate by Ritzmann-Blickenstorfer (1996

Experimental Studies on Incentives, Trust and Social Preferences in Organizations

This thesis aims to highlight the impact and the interaction of trust and other-regarding preferences in organizations. It is investigated whether people with social preferences like reciprocity, altruism or inequity aversion might be motivated not only by monetary incentives like bonuses or performance-based compensation schemes, but also by trust and fairness concerns. Each chapter analyzes a specific aspect of an experimental labor market and investigates the influence of social preferences on the way to motivate people in organizations. The first part of the thesis analyzes if trustful people who are treated trustworthily themselves might react reciprocally and voluntarily perform better as if they were controlled. This phenomenon is investigated in three different experimental studies for individual as well as for group behavioral patterns. It is shown that provided some specific environmental aspects an individual�s motivation indeed can be increased by a trustful handling. However, this effect only holds in an individual context and is not longer seen in a team context. The second part of the thesis analyzes the impact of inequity aversion when workers are paid unequal wages. The results of two experimental studies show that employees react significantly to unequal wages. However, neither pure distributional nor pure intentional concerns can explain the employees� reaction to unequal wages. Their behavior seems to be strongly affected by both aspects

Consumption in Ireland: Evidence from the Household Budget Surveys, 1994-95 to 2004-05. ESRI WP438. August 2012

This paper analyses consumption in Ireland using household survey data. Studying surveys from 1994-95, 1999-2000 and 2004-05, we find that the median non-mortgage household tended to consume more than disposable income in the 1990s but apparently started spending in line with income by 2004-05. The initial high consumption may reflect expected income growth at the time. Mortgage households seem to have consumed in line with income in the 1990s but to have started saving by 2004-05. This may relate to the increase in the average mortgage size. A closer analysis of the 2004-05 survey shows that households receiving their income entirely from state transfer payments seemed to consume their disposable income, and sometimes more. Renters tended to consume more than they earned, while higher mortgages depressed consumption

Euro area CDS spreads in the crisis: The role of open market operations and contagion. ESRI working paper no. 449, February 2013

This paper studies euro area CDS spreads during the financial crisis. We examine the impact of the crisis on both commercial banks and sovereigns, and focus on two questions. First, have the ECB’s open market operations reduced market stress? It seems that large repo volumes, especially if credited to banks the same day, helped initially, and that the announcement of the Securities Market Programme also calmed markets. Asset purchase volumes do not seem to matter directly. Second, was there contagion among and between banks and sovereigns? We find evidence for both. Interestingly, sovereign CDS spreads appear immune after April 2010. We argue that this might reflect the ECB’s efforts to stop contagion during the euro crisis

The effect of unemployment, arrears and negative equity on consumption: Ireland in 2009/10. ESRI WP457. May 2013

Since the onset of the financial crisis, income and consumption have fallen sharply in Ireland, particularly for young households. This paper shows that young households are more likely than older ones to be exposed to unemployment, arrears and negative equity. These may give rise to credit constraints and buffer-stock savings. Savings may be built up not only to finance future consumption, but also to deleverage, since high indebtedness makes the access to additional credit more difficult. We show that the permanent income hypothesis, which posits that consumption should evolve more smoothly than actual income, apparently fails to hold for households in negative equity, at risk thereof and at risk of unemployment. This may have caused much of the decline in aggregate consumption during the crisis

Three aspects of the Swiss term structure: an empirical survey

The term structure is an important transmitter of, and indicator for, monetary policy. This paper studies the Swiss term structure using monthly data from 1989 to 2005. We study the impact of the new monetary policy strategy that the Swiss National Bank (SNB) adopted at the beginning of 2000 on three aspects of the term structure. First, we test the expectations hypothesis and find it confirmed at the short end of the yield curve. At the long end, time-varying term premia seem present. Second, we ask whether the yield curve contains information regarding future inflation and economic activity. We find that a steepening of the yield curve predicted an increase in economic activity in the short term before the change in policy strategy, but not thereafter. Third, we study the contemporaneous reaction of the term structure to macroeconomic conditions and conclude that the SNB's commitment to stabilizing inflation may have become more credible after the change in the monetary policy strateg

"Currency intervention and the global portfolio balance effect: Japanese and Swiss lessons, 2003-2004 and 2009-2010"

This paper shows that the Japanese and Swiss foreign exchange interventions in 2003/04 and 2009/10 seem to have lowered long-term interest rates in a range of industrial countries, including Japan and Switzerland. It seems that this decline was triggered by the investment of the intervention funds in US and euro area bonds and that a global portfolio balance effect made this decline in interest rate spread to other markets, thus easing monetary conditions at home and abroad.

Currency intervention and the global portfolio balance effect: Japanese and Swiss lessons, 2003-2004 and 2009-2010

This paper shows that the Japanese and Swiss foreign exchange interventions in 2003/04 and 2009/10 seem to have lowered long-term interest rates in a range of industrial countries, including Japan and Switzerland. It seems that this decline was triggered by the investment of the intervention funds in US and euro area bonds and that a global portfolio balance effect made this decline in interest rate spread to other markets, thus easing monetary conditions at home and abroad.

A Two-Pillar Phillips Curve for Switzerland

Historically, money growth has played an important role in Swiss monetary policy, until 1999 as a target and from 2000 onwards as an indicator variable. Since the new policy framework focusses on an inflation forecast, the question arises how useful money growth is for predicting future price developments. Using Swiss data, this paper estimates a model first proposed by Gerlach (2004) for the euro area that integrates money growth in an inflation forecasting equation. This "two-pillar" Phillips curve suggests that the low-frequency component of money growth, alongside current inflation and the output gap, helps predict future inflation. These results are confirmed by an alternative money-augmented Phillips curve proposed by Neumann (2003).inflation, money, Phillips curve, Switzerland