What does the future of the Swiss financial sector look like? What framework conditions are needed? On April 17, we co-organized a public event at the University of Bern to discuss these questions with Julie Tomka, Head of the Capital Markets and Infrastructure Section at the State Secretariat for International Financial Matters (SIF). This evening was moderated by Fabio Canetg, macroeconomist and business journalist.
On April 26, we co-organized a webinar with Robert Gordon on Productivity Growth in Europe and the United States. Robert Gordon is one of the most influential researchers in long-term productivity growth, inequality, and inflation.
Productivity growth in many advanced economies has been weaker in recent years than in the decades following the Second World War. Since the financial crisis, it has been lower in Europe (including Switzerland) than in the United States, according to official figures, but similar to Japan or Canada. What are the reasons for these differences? And is it possible to make a forecast for the future?
We discussed these issues with Robert Gordon. In the webinar, he presented his analyses and discussed them with us.
Great topic and great paper: „Bad Luck or Bad Decisions? Macroeconomic Implications of Persistent Heterogeneity in Cognitive Skills and Overconfidence“ by Oliver Pfäuti (alumnus of the Master program in International and Monetary Economics), Fabian Seyrich, and Jonathan Zinman:
A great program and really interesting papers presented at this conference: Challenges for Monetary Policy Transmission in a Changing World (The inaugural conference of the ChaMP Research Network):
Will the digital euro increase financial instability?
In a new paper, Rhys Bidder (King’s Business School), Timothy Jackson (University of Liverpool), and Matthias Rottner (Deutsche Bundesbank) examine the impact of CBDC on financial stability and the economy. They use novel survey evidence and a structural macroeconomic model with endogenous bank runs.
“We find two contrasting effects of CBDC on financial stability. ‘Slow’ disintermediation shrinks a run-prone banking system with positive welfare effects. But the ability of CBDC to offer safety at scale makes bank-runs more likely.”
“…based on our preferred calibration and assessed prospective demand for CBDC, the model suggests an optimal limit level ranging between e1500 and e2500 for CBDC holdings.”
„In March 2023, the Swiss bank Credit Suisse’s so-called Additional Tier 1 (AT1) bonds were written down to facilitate the bank being taken over by UBS, its national rival. Ensuing discussion and market reactions went well beyond Swiss borders, as the write-down was completed without Credit Suisse’s shareholders first being wiped out, thereby deviating from the principle that shareholders bear losses ahead of all other investors. This article asks whether such an outcome is possible under EU law.“
„…the article argues that an outcome akin to that of the Credit Suisse write-down is unlikely for EU banks.“
A great article by Douglas Irwin: „Does Trade Reform Promote Economic Growth? A Review of Recent Evidence„
„…trade reforms have had a positive impact on economic growth, on average, although the effect is heterogeneous across countries.“
Interesting and potentially very relevant: „Macroeconomics of Mental Health“ by Boaz Abramson, Job Boerma & Aleh Tsyvinski
„In our model, individuals experiencing mental illness have pessimistic expectations and lose time due to rumination. As a result, they work less, consume less, invest less in risky assets,…“
Highly recommended! „Why is private credit growing so fast? Is it a risk to financial stability?“
Interesting event at The Brookings Institution with Ana Arsov, Steven Kaplan, Fabio Natalucci Amanda Lynam, CPA, and David Wessel:
Thought-provoking results in this new discussion paper: „Inflation Preferences“ by Hassan Afrouzi Alexander Dietrich Kristian Myrseth Romanos Priftis Raphael Schoenle
„Consumers on average prefer a 0.20% annual inflation rate, considerably below the Federal Reserve’s 2% target. Inflation preferences not only correlate with demographic and socioeconomic characteristics, but also with economic reasoning. A randomized control trial reveals that two narratives based on economic models—describing how inflation lowers the real value of wages as well as money holdings—affect inflation preferences.“
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