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Europe > Switzerland

You are looking at 1 - 10 of 13 items for :

  • Type: Journal Issue x
  • Wages, Compensation, and Labor Costs: General x
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Cover IMF Working Papers
The Leisure Gains from International Trade
Agustin Velasquez
The average number of hours worked has been declining in many countries. This can be explained if workers have preferences with income effects outweighing substitution effects. Then, an optimal response to rising income is to reduce labor supply to enjoy more leisure. In this paper, I develop a novel structural link between trade and aggregate labor supply. Using a multi-country Ricardian trade model, I show that reducing trade barriers leads to fewer hours worked while being compatible with an increase in welfare. In addition, I derive an hours-to-trade elasticity and estimate it by exploiting exogenous income variation generated by aggregate trade. On average, I quantify that the rise in trade openness between 1950 and 2014 explains 7 percent of the total decline in hours per worker in high-income countries.
Keywords:
Hours worked; leisure; labor supply; Marshallian elasticity; uncompensated elasticity; international trade; Ricardian trade model; trade share; trade openness; hours-to-trade elasticity; Income; Real wages; Employment rate; Consumption; Global
Cover IMF Working Papers
Home or Away? Profit Shifting with Territorial Taxation
Dominika Langenmayr
and
Ms. Li Liu
In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that the profitability of UK subsidiaries in low-tax countries increased after the reform compared to subsidiaries of non-UK multinationals in the same countries by an average of 2 percentage points. This increase in profit shifting also leads to increases in measured productivity of the foreign affiliates of UK multinationals of between 5 and 9 percent.
Keywords:
profit shifting; territorial tax system; multinational firms; shifted profit; UK multinational; UK subsidiary; difference-in-differences research design; Total factor productivity; Transnational corporations; Corporate income tax; Income; Wages; Global
Cover IMF Working Papers
Beautiful Cycles: A Theory and a Model Implying a Curious Role for Interest
Mr. Marco Gross
Where do economic cycles come from? This paper contemplates an utmost minimalistic model and underlying theory that rest on two assumptions for letting them emerge endogenously: (1) the presence of interest-bearing debt; and (2) a degree of downward nominal wage rigidity. Despite its parsimony, the model generates well-behaved, self-evolving limit cycles and replicates six essential empirical facts: (1) booms are long- while recessions short-lived; (2) leverage is procyclical; (3) firm profit and wage shares in GDP are counter- and procyclical, respectively; (4) Phillips curves are downward-sloping and convex, and Okun’s law relation is replicated; (5) default cascades arise endogenously at the turning points to recessions; (6) lending spreads are countercyclical. One can refer to the model as being of a Dynamic Stochastic General Disequilibrium (DSGD) kind.
Keywords:
Business and financial cycles.; WP; firm profits; price inflation; profit share; interest rate; market power; money stock; Business and financial cycles; full employment; price Phillips curves; Wages; Wage rigidity; Income; Labor share; Loans; Global
Cover IMF Working Papers
Wage Growth and Inflation in Europe: A Puzzle?
Vizhdan Boranova
,
Raju Huidrom
,
Sylwia Nowak
,
Petia Topalova
,
Mr. Volodymyr Tulin
, and
Mr. Richard Varghese
Wages have been rising faster than productivity in many European countries for the past few years, yet signs of underlying consumer price pressures remain limited. To shed light on this puzzle, this paper examines the historical link between wage growth and inflation in Europe and factors that influence the strength of the passthrough from labor costs to prices. Historically, wage growth has led to higher inflation, but the impact has weakened since 2009. Empirical analysis suggests that the passthrough from wage growth to inflation is significantly lower in periods of subdued inflation and inflation expectations, greater competitive pressures, and robust corporate profitability. Thus the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past.
Keywords:
WP; wage growth; inflation expectation; Wages; inflation; passthrough; Europe; Passthrough ratio; wage-inflation passthrough; firms' profitability; Labor costs; Producer prices; Wage adjustments; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper on Switzerland models the evolving behavior of the Swiss franc relative to the world’s major reserve currencies and considers possible reasons for the shifts. Economic fundamentals, including country-partners and currency of denomination of Swiss trade and finance, are likely to affect which currencies the franc co-moves with, although these factors tend to change only slowly. The behavior of the Swiss franc may have also been affected by the global financial crisis and its aftermath, as well as the shift in recent years from synchronized to divergent monetary policies by the major central banks. Identifying reserve currency blocks and the de facto behavior of currencies is an ongoing pursuit. The two dimensions of exchange regimes—the anchor currency (basket) and the degree of exchange rate flexibility—should be identified simultaneously. The implied regimes align well with Switzerland’s de facto exchange rate arrangements and monetary policy frameworks. The approach used in this paper identifies how the franc co-moves with the major reserve currencies but is agnostic about the driving forces behind these moves.
Keywords:
ISCR; CR; wage; franc; currency; SNB; monetary policy; brake rule; wage gap; gap vis-à-vis; liquidity mismatch; long-run wage-productivity relationship; SNB's FX purchase; reserve portfolio; wage Phillips curve; Currencies; Wage gap; Wages; Labor productivity; Real wages; Global; Europe; Eastern Europe
Cover Policy Papers
Framework Administered Account for Selected Fund Activities-Switzerland Subaccount for Selected Fund Activities
International Monetary Fund
The Fund, represented by the Managing Director, has reached understandings with Switzerland acting through the State Secretariat for Economic Affairs (SECO) (“Switzerland”), to finance capacity building (technical assistance and training) and related activities. On the basis of these understandings, the Managing Director has established the essential terms and conditions of the Subaccount, with which Switzerland concurs, with respect to the nature, design, and implementation of the activities to be financed and the method by which the costs of the activities will be financed from the Subaccount.
Keywords:
PP; Subaccount; fund member; resources of the Subaccount; terms and conditions of the Subaccount; terms and conditions; b. Switzerland; management of the Subaccount; Anti-money laundering and combating the financing of terrorism (AML/CFT); Central America; West Africa; East Africa
Cover IMF Working Papers
The Inflation-Unemployment Trade-off at Low Inflation
Mr. Luca A Ricci
and
Pierpaolo Benigno
Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the curve is virtually vertical for high inflation rates but becomes flatter as inflation declines. Second, macroeconomic volatility shifts the Phillips curve outward, implying that stabilization policies can play an important role in shaping the trade-off. Third, nominal wages tend to be endogenously rigid also upward, at low inflation. Fourth, when inflation decreases, volatility of unemployment increases whereas the volatility of inflation decreases: this implies a long-run trade-off also between the volatility of unemployment and that of wage inflation.
Keywords:
WP; inflation rate; Phillips curve
Cover IMF Staff Country Reports
Switzerland: 2007 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Switzerland
International Monetary Fund
This 2007 Article IV Consultation highlights that Switzerland’s economy is performing well. The expansion moved into its fourth year with above average growth and employment, and few signs of inflation. This favorable outcome can be traced to a vibrant external environment, including in global financial markets, strong macroeconomic policies, and key structural reforms in retailing and labor markets. The financial sector is performing well in a favorable cyclical setting. Bank profitability is strong, and financial soundness indicators have improved. Economic growth, employment, financial markets, financial sector, bank profitability, and financial soundness indicators have improved.
Keywords:
ISCR; CR; consultation staff report; annex; consultation; debt brake; authority; supervisory authority; brake rule; expenditure growth; current account; IMF staff projection; Inflation; Income; Wages; Global; Eastern Europe
Cover IMF Working Papers
Product Market Regulation and the Benefits of Wage Moderation
Mr. Marcello M. Estevão
Euro-area real wages have decelerated sharply in the last 20 years, but this has not yet translated into visibly lower unemployment or faster growth. Weak output growth after such a cost shock is somewhat puzzling and has led some to question the benefits of wage moderation. By isolating structural from cyclical factors in a panel of industrial countries, I show that structurally slower real wage growth, that is, "wage moderation," does raise output growth and lower unemployment rates. However, I show that the impact on both variables depends crucially on product market regulation: weaker competition and barriers to entry mute the growth effects of structural real wage changes by allowing incumbent firms to appropriate larger rents. In this context, overly regulated product markets in the euro area are undermining the effects of labor market reforms on output and employment.
Keywords:
WP; product market; product market regulation; wage curve; labor market reform; Structural change; labor market; reforms; sequencing product market; wage-curve shift; product market reform; product market competition; Commodity markets; Wages; Wage bargaining; Unemployment rate; Real wages
Cover IMF Staff Country Reports
Germany: Selected Issues
International Monetary Fund
This Selected Issues paper on Germany reviews investment trends and business capital stock in Organization for Economic Co-operation and Development (OECD) countries. Sharp wage increases are found to boost capital formation in the short term as employers substitute capital for labor at a rate that adjusts to the higher relative price for labor. To limit the political economy biases to fiscal policy, the paper explores options to strengthen budgetary institutions, notably more transparency; stronger budgetary rules; and more room for Länder governments to mobilize revenue and tailor spending to local circumstances.
Keywords:
ISCR; CR; growth rate; government; payroll burden; social security contribution rate; inflation differential; capital accumulation; equilibrium exchange rate; payroll cost; Unemployment; Labor force participation; Wages; Employment; Europe