In the identified VAR literature the role of the exchange rate in measuring monetary policy shocks has often been neglected. However, many open economies find it useful to target the exchange rate. In such a regime exchange rate innovations will better capture domestic monetary policy shocks....

Following the end of the Bretton Woods system, national monetary authorities adopted various forms of feedback rule for monetary policy. This paper investigates the role of discretion in following stated rules. We motivate a simple reaction function for monetary authorities' official interest...

We analyze the effects of credibility of fiscal policies, first on the levels of the announced and actual deficits, second on the consequences of restrictive fiscal policies. We examine the reasons for which the authorities can have an incentive to announce such policies, and the conditions...

In this paper I use a new keynesian model with nominal price rigidity to analyze the behaviour of the Swiss CPI. In the model nominal price rigidity arises because prices are costly to change for the firms (menu costs). The model shows that, when a supply shock or a sector-related demand shock...

The stance of fiscal policy is commonly assessed by the size of the annual budget deficit and public debt. Both indices fail, however, to correctly reflect the long run financial burden of government programs such as social security. An alternative to "deficit accounting" is "generational...

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This paper tests the rational expectations hypothesis for Swiss and German inflationary expectations. The results show that inflationary expectations are mostly rational in both countries. This confirms the position of the Swiss National Bank and the German Bundesbank that monetary policy cannot...

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This study examines whether positive and negative money-supply shocks have asymmetric effects on output. The empirical evidence for Switzerland is in general consistent with the findings for other countries: negative shocks affect output more strongly in absolute terms than positive shocks....

The prospect of the European monetary union moving ahead on schedule has recently revived the discussion on stabilisation policies. The starting point of this discussion has been the observation that, because of relatively low labour mobility and the presence of country-specific shocks, monetary...