Forecast update. No surprises from the «KOF surprise indicator» for measuring Swiss economic dynamics as it stays put at -0.021 (slightly down from -0.020) in 2018, first quarter. This signal of strength combined with slight upward revisions of recent GDP data boosts the nowcast for the Swiss economy. Details»
|2018-04-11||Fiscal policy||Debt brakes. Do debt brakes need the «right» design for working properly? No, recent results obtained with a new methodology show. The standard methods in the literature are badly flawed which is why some results may really surprise you. Details»|
|2018-03-26||Financial markets||No AI singularity. The so-called «AI singularity» just does not exist. And if it does we do not care! Details»|
|2018-03-22||Fiscal policy||Fiscal multipliers. Fiscal multipliers could inform policy makers about their policy's impact IF we only knew their values. Unfortunately, theoretical research has created a «fiscal multiplier morass». Read why Leeper et al.'s latest DSGE approach has made matters only worse. Details»|
Forecast update. The «KOF surprise indicator» for measuring Swiss economic dynamics slips to -0.020 (down from revised -0.015) in the final quarter of 2017. Despite notching down a bit from its Q3 reading, the recent update confirms positive signals from growing foreign trade, currency depreciation and declining unemployment figures.
|2017-11-15||Quantification||Forecast update. Its second consecutive increase pushes the «KOF surprise indicator» for measuring Swiss economic dynamics to a level last seen when the Swiss Franc was still fixed to the Euro in late 2014. The new level of -0.016 (up from a revised -0.020) in the second quarter indicates a significant acceleration of economic activity in the second half of the year. Details»|
Mankiw's 9th principle. Gregory Mankiw says: Prices rise when the government prints too much money because money growth would CAUSE inflation. However, reading the fineprint of the Mankiw's proof, we beg to differ as there lures a wide gap between Mankiw's principle and the factual evidence »
|2017-08-16||Financial markets||«Criticism without critics» wonders why some economists tend to fence off criticism without quoting the critics. Some answers are available (in German, Finanz und Wirtschaft and Oekonomenstimme) here»|
Forecast update. The «KOF surprise indicator» for measuring Swiss economic dynamics records a slight increase to -0.022 (up from -0.032) in the second quarter of this year. Its recent decline has therefore already stopped which indicates a steady expansion of the Swiss economy. A short-run prediction of Swiss GDP growth based on the «KOF surprise indicator» ahead of this year's major GDP data revision obtains a moderate rate of growth of about 1.2 percent year-on-year. Details»
|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»|