|2017-05-15||Financial markets||Money is trust which is why it cannot be created out of nothingness (in German). Details»|
Forecast update. Despite a minor decrease the «KOF surprise indicator» for measuring Swiss economic dynamics remains at an elevated level. Its first reading of -0.032 for the year 2017, down from -0.022 in the last quarter of 2016, lends credibility to hopes for a continued expansion of the Swiss economy albeit at a moderate rate. Details»
|2017-04-09||Financial markets||The Deutsche Bundesbank's TARGET2 series, the Swiss National Bank and Mephisto Or, how the SNB got itself in trouble and what option it still has: Not many, none of them attractive (in German). Details»|
Forecast update. The «KOF surprise indicator» for measuring Swiss economic shows a strong upward correction to now -0.026, up from -0.044 in the third quarter 2016.
|2017-01-24||Financial markets||What is money? Trust. Details»|
|2017-01-20||Financial markets||«Spooky neoclassics» «If quantum mechanics hasn't profoundly shocked you, you haven't understood it yet.» (Niels Bohr)
Neoclassical economics has its own shocking «quantum mechanics» though it receives way less coverage than our fellow physicists' one. You too have certainly not heard of the SMD theorem yet, which means that you are happy and proud of having mastered basic economics. Therefore, think about reading on, if you do, it is at your own risk! Details»
|2016-11-16||Quantification||Forecast update. The third quarter of this year witnessed the second consecutive decline of the «KOF surprise indicator» to -0.044 (down from -0.036).
For the time being, the new reading of the «KOF surprise indicator» implies an even stronger expansion of the Swiss economy year-on-year with real GDP growth now estimated to reach 2.07 percent in 2016, second quarter.
Though based on the «KOF surprise indicator» this new estimate comes on the back of severely revised quarterly GDP figures. These revisions raise more questions than they answer, however. Details»
|2016-09-27||Financial markets||«Fukuyama models» The Lucas (1976) critique has triggered an anti Keynesian revolution. Applying his own criticism to the models that sprang out of this revolution shows that they are not, in fact, "Lucas proof". It is argued that by Lucas' standards, DSGE models of the real business cycle, new classical, or new Keynesian kind should be externally valid while they are not and pretty much cannot be, not even theoretically. Only «Fukuyama models» are truly Lucas proof but they are hard to come by and do not make much sense. Uncertainty offers a reconciliation. Details»|
|2016-08-17||Quantification||Forecast update. The first reading of the «KOF surprise indicator» for measuring Swiss economic dynamics of -0.036 (down from -0.032) after the Brexit vote shows a slight decline in comparison to the previous quarter. This new value indicate an end of the positive outlook for Swiss GDP growth witnessed earlier.
Swiss year-on-year real GDP growth is now estimated at 0.9 percent by means of the «KOF surprise indicator» in 2016, second quarter. Details»
|2016-06-08||Financial markets||Why uncertainty? «Uncertainty» has become a buzz word in economics. In this oekonomensitimme article I shed light on what causes uncertainty in the first place. Understanding the sources of uncertainty offers a more nuanced perspective on the role governments in fighting the aftermath of the financial crisis (in German). Details»|
|2016-05-23||Quantification||Forecast update. After dipping four times in a row the «KOF surprise indicator» shows signs of recovery. The first quarter's level of -0.033 (2015, 4th quarter: -0.044) gives rise to the hope that the worst of the appreciation shock is finally over.
Swiss year-on-year real GDP growth is estimated at 1.2 percent by means of the «KOF surprise indicator» in 2016, first quarter. Details»
|2016-05-20||Financial markets||No puzzle for 'o men! Simple robustness tests reveal: Charles Engel's «Exchange Rates, Interest Rates, and the Risk Premium» (AER 2016, Feb, pp. 436-74) lacks empirical credibility. Pretty much none of the key regressions show any form of resiliance against minor variations of the sample definition (see graph). The puzzle that just isn't explains why and shows that we meet the well-known absence-of-puzzle problem again. With a quote from Wonko the Sane! Downloadable»|
|2016-02-17||Quantification||Forecast update. The «KOF surprise indicator» has declined for the fourth consecutive quarter, an observation last made at the onset of the financial crisis. However, the new level of -0.044 (2015, 3rd quarter: -0.039) is still far above its worst ever reading (2009, 2nd quarter: -0.083) signalling weak annual growth rate of the Swiss economy.
Estimating the actual year-on-year expansion of real value added in the Swiss economy by means of the «KOF surprise indicator» obtains a growth rate of 1 percent for the whole of 2015. Details»
|2016-01-29||Law and Economics||Development policy works - but not the way you may think. Economists have assessed the economic performance of development projects along economic indicators for too long. The main goal of economic development project is foreign affairs management. Development policy must therefore first judged according to whether foreign policy objectives are met, economic targets take a backseat, it is argued in a «oekonomenstimme» blog post. Details»|
||The Master's idea: Revitalising uncertainty John Maynard Keynes can be credited not only with being the most influential economist of the 20th century, but also with having put forth the most intriguing concept of uncertainty. The ``Master's'' understanding of uncertainty is indeed so radical that not even his avowed disciples dared facing all its consequences. As the recent financial crises have proven, however, the prevailing concepts of uncertainty require a refurbishment. This note highlights the key features of Keynesian uncertainty and the role uncertainty plays in his thinking. These ideas will then be put in the context of recent challenges to economists and econometricians. Details»|
Forecast update. The «KOF surprise indicator» for measuring Swiss economic dynamics recorded yet another mild decline to now -0.039, down from -0.035 in the second quarter 2015.
||Published: You may now measure business cycles without all the revision hassles. We show how to extract business cycle shocks and prove that negative surprises hurt more. Comments are welcomed and the software code is happily shared. Download»|
Forecast update. The «KOF Surprise Indicator» for measuring Swiss economic dynamics declined for the second consecutive time to now -0.035, down from -0.032 in the first quarter 2015. This decrease is significantly smaller than last quarter's which could indicate the abating of the shock wave the strong currency sent through the economy.
|2015-06-19||Disaggregation||Published: Read why and how you may test the validity of your favourite temporal disaggregation procedure (Chow&Lin's). Comments are welcomed and the software code happily shared. Download»|
|2015-06-04||Financial markets||Published! Radical Uncertainty: Sources, Manifestations and Implications This paper argues that radical uncertainty is the outcome of standard market activity. The theoretical findings are corroborated with empirical analyses. The model example is applied to asset pricing and radical uncertainty is found a solution to various asset pricing «puzzles». In conclusion, radical uncertainty should form the basis of economic analysis. Downloadable!|
|2015-05-13||Quantification||Forecast update. During the first quarter of 2015 which has witnessed the strong appreciation of the Swiss Franc, the «KOF surprise indicator» for measuring Swiss economic dynamics dropped to early 2013 levels. It's recent value of -0.032 (2014, 4th quarter: -0.019) signals a weaker annual growth rate of the Swiss economy.
Estimating the actual year-on-year expansion of real value added in the Swiss economy by means of the «KOF surprise indicator» obtains a growth rate of 1.7 percent down from 1.9 in the previous period. Details»
|2015-03-16||Law and Economics||Egyptian twin capital gap. By focussing strongly on attracting financial capital Egypt might turn a blind eye on the serious lack of so-called social capital without which the economy hardly can take off. Details»|
|2015-02-13||Quantification||Forecast update. The KOF Surprise Indicator for measuring Swiss economic dynamics bounces back to a healthy -0.019 (2014, 3rd quarter: -0.025) poitning to a stronger than recently hoped-for economic performance in 2014. Based on the new «KOF Surprise Indicator» value the annual real GDP growth amounts to only 2.3 per cent up from 1.4 percent in the third quarter 2014 year-on-year. Details»|