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Dirk Niepelt

Dirk Niepelt

Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

Articles by Dirk Niepelt

Mobile Phone Use and Cognitive Functions

2 days ago

In Environmental Health Perspectives, Milena Foerster, Arno Thielens, Wout Joseph, Marloes Eeftens, and Martin Röösli report findings that suggest potential adverse effects of adolescents’ mobile phone use on cognitive functions.
We found preliminary evidence suggesting that RF-EMF may affect brain functions such as figural memory in regions that are most exposed during mobile phone use. Our findings do not provide conclusive evidence of causal effects and should be interpreted with caution until confirmed in other populations. Associations with media use parameters with low RF-EMF exposures did not provide clear or consistent support of effects of media use unrelated to RF-EMF (with the possible exception of consistent positive associations between verbal memory and data traffic

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Financial Sanctions, the USD, and the EUR

13 days ago

On Moneyness, JP Koning discusses the ability or not of the U.S. treasury to enforce financial sanctions overseas. Focusing on the Iran sanctions that ran from 2010 to 2015 (with strong international support) and are scheduled to be reimposed soon (without such support) Koning compares the U.S. sanctions regime to an exclusivity agreement that a large retailer imposes on a manufacturer.
Foreign banks in places like Europe were free to continue providing transactions services to Iran, but if they did so they would not be able to maintain correspondent accounts at U.S. banks. To ensure these rules were enforced, U.S. banks were to be fined and U.S. bank executives incarcerated if found guilty of providing accounts to offenders. Fearful bank executives were very quick to comply by

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Bullshit Jobs and Corporate Correctness

June 11, 2018

In the New Yorker, Nathan Heller reviews David Graeber’s “Bullshit Jobs.”
In the course of Graeber’s diagnosis, he inaugurates five phyla of bullshit work. “Flunkies,” he says, are those paid to hang around and make their superiors feel important: doormen, useless assistants, receptionists with silent phones, and so on. “Goons” are gratuitous or arms-race muscle; Graeber points to Oxford University’s P.R. staff, whose task appears to be to convince the public that Oxford is a good school. “Duct tapers” are hired to patch or bridge major flaws that their bosses are too lazy or inept to fix systemically. (This is the woman at the airline desk whose duty is to assuage angry passengers when bags don’t arrive.) “Box tickers” go through various motions, often using paperwork or

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Redenomination Risk in the Eurozone

June 5, 2018

In a CEPR discussion paper Christian Bayer, Chi Kim, Alexander Kriwoluzky analyze redenomination risk during the European debt crisis and how the European Central Bank’s interventions affected this risk. They conclude that the risk fell in the case of Italy but increased for France and Germany.
From the abstract:
… first estimate daily default-risk-free yield curves for French, German, and Italian bonds that can be redenominated and for bonds that cannot. Then, we extract the compensation for redenomination risk from the yield spreads between these two types of bonds. Redenomination risk primarily shows up at the short end of yield curves. At the height of the euro crisis, spreads between first-year yields were close to 7% for Italy and up to -2% for Germany. The ECB’s interventions

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Marx was Right—Partly

May 5, 2018

According to René Scheu in the NZZ.
Die zehn «Massregeln» für die «fortgeschrittensten Länder», in die das «Kommunistische Manifest» mündet, lesen sich aus heutiger Sicht wie ein sozialdemokratisches Programm, dem auch viele softbürgerliche Politiker sogleich vorbehaltlos zustimmen würden. Starke Progressivsteuer, Geldmonopol der Nationalbank, Zentralisation des Transportwesens, nationale Industriepolitik, Verstaatlichung des Bauernstandes und unentgeltliche Erziehung aller Kinder gehören längst zu den Errungenschaften avancierter Wohlfahrtsstaaten – damit sind wohlgemerkt bereits sechs der zehn Punkte erfüllt….
Marxens Kritik zielt nicht auf den Unternehmer und Eigentümer als solchen, sondern auf den Bourgeois, der auf der faulen Haut liegt und auf Kosten anderer lebt. …
Der Verfasser

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“Was Vollgeld bringt – und was nicht (Sovereign Money—Pluses and Minuses),” SRF, 2018

April 30, 2018

[embedded content]
Wer soll Franken herstellen dürfen? Nur die Schweizerische Nationalbank, oder auch die Geschäftsbanken wie UBS, CS oder die Kantonalbanken? Ginge es nach der Vollgeld-Initiative, über die wir am 10. Juni abstimmen, wäre künftig klar: Geld als gesetzliches Zahlungsmittel gäbe es nur von der SNB.
Offsetmaschine zum Druck von Schweizer Banknoten bei der Schweizerischen Nationalbank. Keystone – Click to enlarge
Höchst umstritten ist jedoch, welche Folgen es hätte, würde die Schweiz als erstes und einziges Land ihre Währung auf Vollgeld umstellen.
Die Befürworter sagen, das Geld auf dem Bankkonto wäre dann viel sicherer als heute – so sicher wie Bargeld im Tresor. Und zwar auch, wenn dereinst wieder

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April 24, 2018

On their blog, Stephen Cecchetti and Kermit Schoenholtz voice doubts regarding the usefulness of universal central bank digital currency (U-CBDC). They argue:
… in an effort to retain their deposit base, commercial banks would surely raise the interest rate they offer to their customers relative to the rate on U-CBDC. … the introduction of U-CBDC would cause a substantial fraction of deposits to shift to the central bank, with the remainder prone to exit in a period of financial stress.
… if the Federal Reserve were to issue U-CBDC, we expect that this would not only hollow out the U.S. commercial banking system, but also destabilize the financial system in a range of countries.
… what would the central bank become? As its U-CBDC liabilities grow, its assets will need to expand as

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Does CBDC Increase Run Risk?

April 16, 2018

Central bankers often argue that CBDC would increase the risk of bank runs. On his blog, JP Koning rejects this notion. After all, he retorts, during a confidence crisis bank customers would no longer have to queue to withdraw cash; lender of last resort support would be provided much more quickly; and “large” cash holders would continue to shift funds into treasury bills, not into CBDC.
Koning writes:
The general criticism here is that during a crisis, households and businesses will desperately shift their deposits into the ultimate risk-free asset: central bank money. Presumably when deposits were only redeemable in banknotes (as is currently the case) and one had to trudge to an ATM to get them, this afforded people time for sober contemplation, thus rendering runs less damaging.

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Elektronisches Zentralbankengeld hat Vorteile

April 13, 2018

– Click to enlarge
Die Schweizerische Nationalbank hat dem E-Franken eine Absage erteilt – zu Unrecht, sagt Dirk Niepelt im Interview mit Der Direktor des SNB-nahen Studienzentrums Gerzensee erklärt, warum digitales Geld Vorteile bringt.
Vergangene Woche hat sich Andréa Mächler, Mitglied des dreiköpfigen Direktoriums der Schweizerischen Nationalbank (SNB), kritisch zur Einführung eines elektronischen Frankens durch die SNB geäussert, wie auch berichtete. Im Folgenden geht Dirk Niepelt vom Studienzentrum Gerzensee vertieft auf das Thema einer digitalen Zentralbankenwährung ein und nennt die Auswirkungen, welche diese hätte.
Herr Niepelt, was ist der Unterschied zwischen einer Kryptowährung

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AXA Stops `Vollversicherung’ Model

April 10, 2018

In the NZZ, Werner Enz reports that the insurance company AXA will stop offering “Vollversicherungen.” One motivation relates to the fact that the second pillar in the Swiss pension system is increasingly abused, with redistribution undermining supposedly “individual” accounts.

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Global Heat Map

April 7, 2018

A global heat map based on data collected by the Strava fitness app, representing 700 million activities; a total distance of 16 billion km; and a total recorded activity duration of 100 thousand years.

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None of Your Business

April 5, 2018
Many companies ignore the stringent privacy laws in Europe. This is possible, because it is too complicated and expensive for individual users to claim their rights. noyb will close the gap between law and the reality by collectively enforcing your rights, so that your rights become reality.

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April 4, 2018

Kontantupproret (“cash rebellion”) in Sweden—not everybody is pleased with the prospect of a cashless society.
David Crouch reports in The Guardian.

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“Fiscal and Monetary Policies”

April 4, 2018

The Journal of Economic Dynamics and Control has published a special issue with the papers of the conference on “Fiscal and Monetary Policies” that the Study Center Gerzensee co-organized with the JEDC, the St. Louis Fed, the University of Bern, and the Swiss National Bank.
This earlier post contains a link to the conference program.

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Monetary Policy and the Wealth Distribution

March 29, 2018

In a Staff Working Paper, the Bank of England’s Philip Bunn, Alice Pugh, and Chris Yeates discuss how monetary policy easing following the financial crisis affected income and wealth of different age groups.
The authors analyze survey panel data (ONS Wealth and Assets Survey) on households’ characteristics and balance sheet positions. They argue that
the overall effect of monetary policy on standard relative measures of income and wealth inequality has been small. Given the pre-existing disparities in income and wealth, we estimate that the impact on each household varied substantially across the income and wealth distributions in cash terms, but in percentage terms the effects were broadly similar. We estimate that households around retirement age gained the most from the support to

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BIS report on CBDC

March 26, 2018

A BIS report submitted by the Committee on Payments and Market Infrastructures and the Markets Committee discusses potential implications of the introduction of central bank digital currency for payments, monetary policy, and financial stability.
From the executive summary
… CBDC is potentially a new form of digital central bank money that can be distinguished from reserves or settlement balances held by commercial banks at central banks. There are various design choices for a CBDC, including: access (widely vs restricted); degree of anonymity (ranging from complete to none); operational availability (ranging from current opening hours to 24 hours a day and seven days a week); and interest bearing characteristics (yes or no).
… Two main CBDC variants are … a wholesale and a general

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Saga—A Global CBDC?

March 22, 2018

In the FT, Martin Arnold reports about plans to launch “Saga,” a reserves-backed krypto currency, maybe the closest substitute yet to central bank digital currency.
It is being launched by a Swiss foundation with an advisory board featuring Jacob Frenkel, … Myron Scholes, … and Dan Galai, co-creator of the Vix volatility index. The currency aims to avoid the wild price swings of many cryptocurrencies by tethering itself to reserves deposited in a basket of fiat currencies at commercial banks. Holders of Saga will be able to claim their money back by cashing in the cryptocurrency.
Saga also aims to avoid the anonymity of bitcoin that raises financial crime concerns with regulators and bankers. It will require owners to pass anti-money laundering checks and allow national authorities to

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Die Schweiz sollte sich elektronischem Zentralbankgeld nicht verschliessen

March 19, 2018

Reto Föllmi und Fabian Schnell haben sich in einem vor Kurzem veröffentlichten Beitrag auf der Ökonomenstimme gegen die Einführung eines "Krypto-Frankens" ausgesprochen. Hier folgt eine Replik von Dirk Niepelt, der darauf hinweist, dass es durchaus Vorteile eines Krypto-Frankens gebe.
Unter dem Titel "Die Schweiz braucht keinen
Krypto-Franken" haben sich Reto Föllmi und Fabian Schnell in der NZZ und auch
auf der Ökonomenstimme gegen einen durch die Schweizerische Nationalbank (SNB) emittierten
digitalen Franken ausgesprochen.[ 1 ]
Föllmi und Schnell thematisieren primär privat
emittierte Kryptowährungen wie Bitcoin, und sie suggerieren, dass zwischen
diesen und digitalem Zentralbankgeld enge Parallelen bestünden. Doch dem ist
nicht so. Kryptowährungen sind für die Diskussion um

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March 15, 2018

In the FT, Mehreen Khan and Aliya Ram report that MasterCard and IBM plan to create a “data trust” to allow businesses with EU customers to meet the strict General Data Protection Regulation (GDPR) provisions that come into effect by the end of May. “Truata” will be based in Dublin.
The independent company, called Truata, will manage, anonymise and analyse vast amounts of personal information held by companies such as travel agents and insurers in a way that is compliant under the EU’s General Data Protection Regulation (GDPR). …
Truata will strip data sets of key details such as a person’s name, contact details or email address so they cannot be re-identified from the information. It will also offer analytical services to allow a business to extract valuable information from the

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U.S. Tax Enforcement and Offshore Accounts

March 5, 2018

In an NBER working paper, Niels Johannesen, Patrick Langetieg, Daniel Reck, Max Risch, and Joel Slemrod discuss the effects of recent U.S. tax enforcement initiatives on tax compliance. They offer background information about U.S. initiatives since 2009 and conclude, based on administrative microdata, that
[e]nforcement caused approximately 60,000 individuals to disclose offshore accounts with a combined value of around $120 billion. Most disclosures happened outside offshore voluntary disclosure programs by individuals who never admitted prior noncompliance. The disclosed accounts were concentrated in countries whose institutions facilitate tax evasion. The enforcement-driven disclosures increased annual reported capital income by $2.5-$4 billion corresponding to $0.7-$1.0 billion in

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SIX Group, Reserves for All

February 26, 2018

In the FT, Ralph Atkins reports that Romeo Lacher, Chairman of SIX group, supports the idea of Switzerland introducing an ‘E-Franc.’

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“Financial Policy,” CEPR, 2018

February 26, 2018

CEPR Discussion Paper 12755, February 2018. PDF. (Personal copy.)
This paper reviews theoretical results on financial policy. We use basic accounting identities to illustrate relations between gross assets and liabilities, net debt positions and the appropriation of (primary) budget surplus funds. We then discuss Ramsey policies, answering the question how a committed government may use financial instruments to pursue its objectives. Finally, we discuss additional roles for financial policy that arise as a consequence of political frictions, in particular lack of commitment.

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“Fiscal and Monetary Policies,” Bern, Spring 2018

February 15, 2018

MA course at the University of Bern.
The classes follow chapters 11–13 in this text and build on the material covered in chapters 1–5. Uni Bern’s official course page. The course TA is Christian Myohl.
Main contents:
RA model with government spending and taxes.
Government debt in RA model.
Government debt and social security in OLG model.
Neutrality results.
Consolidated government budget constraint.
Fiscal effects on inflation. Game of chicken.
FTPL. Active and passive policies.
Primal and dual approach.
Tax smoothing.
Time consistent policy.

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ECB Bond Purchases: Fiscal or Monetary Policy?

February 11, 2018

In an NBER working paper, Arvind Krishnamurthy, Stefan Nagel, and Annette Vissing-Jorgensen analyze which components of bond yields were affected by the European Central Bank’s government bond purchasing programs.
Given the institutional restrictions on monetary policy in the Euro area, the ECB had to carefully argue why it intervened in the first place. (To many, the case was obvious; the ECB intervention amounted to quasi-fiscal policy. But an intervention with this objective would not be covered by the rules of the Euro area.) It gave two reasons for the SMP, OMT, and LTRO:

The ECB has publicly stated that these policies reduce redenomination risk, i.e., the risk that the Eurozone might break up and countries redenominate domestic debt into new domestic currencies, and financial

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