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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

Plans for a Deposit Token in Switzerland

12 days ago

Swiss Banking proposes a “Deposit Token,” New Money for Switzerland.
This white paper focuses on the question of how banks can best support the Swiss economy when it comes to settling transactions in digital assets and executing payments in a digitalised economy. As the digital transformation sweeps through the economy and society at large, it requires support from efficient, generally accepted and secure means of payment. Against this background and considering developments such as the tokenisation of assets and the emergence of decentralised finance applications, the Swiss Bankers Association (SBA) is working on the concept of a digital currency in the form of tokenised deposits based on distributed ledger technology (DLT): the “Deposit Token” (DT). This kind of stablecoin, if

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German University Life c. 1900

February 24, 2023

An American professor’s perspective as reported on Irwin Collier’s Economics in the Rear-View Mirror:
On an October morning, some years since, a recent Vermont graduate and I entered together the Aula of the Friedrich-Wilhelms-University at Berlin. Lectures were still two weeks away; but Germany is a country of leisurely beginnings and this was the morning of matriculation. The great hall was thronged with an interesting company. At a long table sat the Rector Magnificus, Harnack, the mighty theologian, and the professors of the various faculties. Moving about the room were students of three types: foreigners like ourselves; wanderers from other universities of the Fatherland; and boys from the “Gymnasium,” who had passed the “Abiturient” examination and become “mules” or freshmen.

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January 16, 2023

WKO guest professor at the University of Vienna. Public event on 19 January.

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“Fiscal and Monetary Policies,” Bern, Spring 2023

January 4, 2023

MA course at the University of Bern.
Time: Monday, 12.15 – 14.00. Location: UniS, A027. Uni Bern’s official course page. TA: Remo Taudien.
This course covers macroeconomic theories of fiscal policy (including tax and debt policy) and the interaction between fiscal and monetary policy. Participants should be familiar with the material covered in the course Macroeconomics II. The course grade reflects the final exam grade. The classes follow selected chapters in the textbook Macroeconomic Analysis (MIT Press, 2019) and build on the material covered in the macro II course which follows the same text.
Main contents:
RA model with government spending and taxes.
Government debt in RA model.
Government debt and social security in OLG model.
Neutrality results.

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“Topics in Macroeconomics,” Bern, Spring 2023

January 4, 2023

BA course at the University of Bern.
Time: Monday, 10:15–12:00. Location: UniS, S101. Uni Bern’s official course page.
The course targets students who have completed their mandatory training in microeconomics, macroeconomics and mathematics and who are interested to make use of macroeconomic theory in order to analyze questions related to asset prices, bubbles, government debt, or the link between fiscal and monetary policy. The grade may depend on participation in class; small group projects; and/or a written exam.

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The Economics of Brexit

December 24, 2022

In one of the eBooks that CEPR published in 2022 several authors draw first conclusions. From the introduction by Jonathan Portes:

The analyses in this eBook are very much a preliminary and incomplete account of the economic impacts of Brexit. In some cases, they raise as many questions as they answer.For example, why have UK imports of EU goods fallen so sharply, while UK exports are much less affected, when (in contrast to the EU) the UK has not yet introduced the full panoply of import controls provided for under the TCA? Why has the large fall in the number of EU workers in some sectors – and a corresponding rise in vacancies – not translated into higher wages, at least in relative terms? Nevertheless, the overwhelming weight of the evidence presented suggests that – very much

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“Sovereign Bond Prices, Haircuts and Maturity,” JIE, 2023

December 20, 2022

With Tamon Asonuma and Romain Ranciere. Journal of International Economics 140, 103689, January 2023. PDF.

We document that creditor losses (”haircuts”) during sovereign debt restructurings vary across debt maturity. In our novel dataset on instrument-specific haircuts suffered by private creditors in 1999-‒2020 we find larger losses on short- than long-term debt, independently of the specific haircut measure we use. A standard asset pricing model rationalizes our findings under two assumptions, both of which are satisfied in the data: increasing short-run restructuring risk in the run-up to a restructuring, and high exit yields. We relate our findings to the policy debate on restructuring procedures.

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Contagion in Decentralized Markets

December 18, 2022

At the BIS 21st Annual Conference in June I discussed work by Alfred Lehar and Christine Parlour on “Systemic fragility in decentralised markets.” The paper and my discussion have now been issued as BIS working paper 1062.

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Lucas Kyriacou’s “Python for Macroeconomists”

December 13, 2022

Lucas Kyriacou has posted a Jupyter notebook with a great introduction to Python.
From the readme file:

This course aims to introduce PhD students to the basics of the popular and powerful programming language called Python. After going through the basics, we will also see some applications such as OLS regression, extraction of information from textual data, data visualization and object-oriented programming. In an extended version of this course we will further discuss various applications such as bulk downloading macroeconomic data, VAR estimation and solving macroeconomic models.

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Economics PhD Admissions

November 22, 2022

In an NBER working paper, Jessica Bai, Matthew Esche, W. Bentley MacLeod and Yifan Shi argue:
We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of

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Robert Wolff’s “Original Wisdom”

November 9, 2022

Goodreads rating 4.37. Wolff describes his experiences in rural Malaysia and in the jungle among the Sng’oi, where he learns (rather than being taught) new forms of awareness and knowledge.
I saw clearly—perhaps for the first time—that most people, even scientists, can see the world only from one point of view: their own. [p. 146]
Malay culture values halus—soft, gentle, polite—and despises kasar.

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“Sovereign Bond Prices, Haircuts and Maturity,” UniBe, 2022

November 8, 2022

With Tamon Asonuma and Romain Ranciere. UniBe Discussion Paper 22-13, November 2022. PDF.

We document that creditor losses (”haircuts”) during sovereign debt restructurings vary across debt maturity. In our novel dataset on instrument-specific haircuts suffered by private creditors in 1999-‒2020 we find larger losses on short- than long-term debt, independently of the specific haircut measure we use. A standard asset pricing model rationalizes our findings under two assumptions, both of which are satisfied in the data: increasing short-run restructuring risk in the run-up to a restructuring, and high exit yields. We relate our findings to the policy debate on restructuring procedures.

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Mortality Externalities of CO2-Emissions

November 6, 2022

In the Quarterly Journal of Economics (137, 4), a group of authors estimates that
the mean global increase in mortality risk due to climate change, accounting for adaptation benefits and costs, is valued at roughly 3.2% of global GDP in 2100 under a high-emissions scenario. Notably, today’s cold locations are projected to benefit, while today’s poor and hot locations have large projected damages. Finally, our central estimates indicate that the release of an additional ton of CO2 today will cause mortality-related damages of $36.6 under a high-emissions scenario, with an interquartile range accounting for both econometric and climate uncertainty of [−$7.8, $73.0].

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Mariana: CBDCs in Automated Market Makers

November 2, 2022

Three BIS innovation hubs plan to test DeFi inspired liquidity pools to exchange wCBDCs. BIS press release:

Project Mariana will use DeFi protocols to automate foreign exchange markets and settlement.
Automated market makers can become the basis for new generation of financial infrastructure.
Exploration on cross-border exchange of wholesale CBDCs is the first to involve three Hub centres.
The BIS Innovation Hub is launching a new project around central bank digital currencies (CBDCs) and Decentralised Finance (DeFi) protocols as part of its 2022 work programme.
Project Mariana explores automated market makers (AMM) for the cross-border exchange of hypothetical Swiss franc, euro and Singapore dollar wholesale CBDCs. It will seek to examine the potential between financial institutions

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“Money and Banking with Reserves and CBDC,” UniBe, 2022

November 1, 2022

UniBe Discussion Paper 22-12, October 2022. PDF.
We analyze retail central bank digital currency (CBDC) in a two-tier monetary system with bank deposit market power and externalities from liquidity transformation. Resource costs of liquidity provision determine the optimal monetary architecture and modified Friedman (1969) rules the optimal monetary policy. Optimal interest rates on reserves and CBDC differ. A calibration for the U.S. suggests a weak case for CBDC in the baseline but a much clearer case when too-big-to-fail banks, tax distortions or instrument restrictions are present. Depending on central bank choices CBDC raises U.S. bank funding costs by up to 1.5 percent of GDP.

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“The Swiss National Bank in Brief”

October 28, 2022

The SNB’s mandate
Monetary policy strategy
Implementation of monetary policy
Ensuring the supply and distribution of cash
The SNB’s role in the cashless payment system
Asset management
The SNB’s contribution to financial stability
International monetary cooperation
Independence, accountability and relationship with the Confederation
The SNB as a company
Legal basis
Publications and other resources
SNB balance sheet

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Gabriel García Márquez’s “One Hundred Years of Solitude”

October 28, 2022

Translated by Gregory Rabassa. Goodreads rating 4.10.
…the secret of a good old age is simply an honorable pact with solitude. [p. 205]
… and once again she shuddered with the evidence that time was not passing, as she had just admitted, but that it was turning in a circle. [p. 341]
Both looked back then on the wild revelry, the gaudy wealth, and the unbridled fornication as an annoyance and they lamented that it had cost them so much of their lives to find the paradise of shared solitude. Madly in love after so many years of sterile complicity … [p. 345]
… and then they understood that José Arcadio Buendía was not as crazy as the family said, but that he was the only one who had enough lucidity to sense the truth of the fact that time also stumbled and had accidents and could

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Digital Money and Finance: What’s New?

October 20, 2022

CEPR/SUERF/CB&DC webinar with Darrell Duffie, Todd Keister, Harald Uhlig, Dirk Niepelt.
Digitisation rapidly changes money, banking and finance. Are these changes fundamental and radical—or part of a continuous process of technological progress and efficiency improvement? Do academics have to re-think money, banking and finance—or do conventional theories apply? And do finance professionals and regulators need to re-assess their frameworks and tools to keep up with the transformation?
Darrell Duffie (Stanford University and Fintech & Digital Currencies RPN Member), Todd Keister (Rutgers University and Fintech & Digital Currencies RPN Member) and Harald Uhlig (University of Chicago, CEPR and Fintech & Digital Currencies RPN Member), three experts on macro economics, monetary

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Political Economy for Investors

October 20, 2022

Mark Dittli of the market NZZ interviews Russell Napier:
… the power to control the creation of money has moved from central banks to governments. By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money.
… statistics on bank loans to corporates within the European Union since February 2020: Out of all the new loans in Germany, 40% are guaranteed by the government. In France, it’s 70% of all new loans, and in Italy it’s over 100%, because they migrate old maturing credit to new, government-guaranteed schemes.
… we are headed into a significant growth slowdown, even a recession, and bank credit is still growing. … The CFO of Commerzbank was asked about this fact in July, and she said that the

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GNU Taler

October 14, 2022

The GNU Taler project:
We are building an anonymous, taxable payment system using modern cryptography. Customers will use traditional money transfers to send money to a digital Exchange and in return receive (anonymized) digital cash. Customers can use this digital cash to anonymously pay Merchants. Merchants can redeem the digital cash for traditional money at the digital Exchange. As Merchants are not anonymous, they can be taxed, enabling income or sales taxes to be withheld by the state while providing anonymity for Customers.

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October 11, 2022

September 13, 2022

Mr. Lee (for himself and Mr. Braun) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

To amend the Federal Reserve Act to limit the ability of Federal Reserve banks to issue central bank digital currency.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

This Act may be cited as the “No Central Bank Digital Currency Act” or the “No CBDC Act”.


Section 13 of the Federal Reserve Act is amended by adding after the 14th undesignated paragraph (12 U.S.C. 347d) the following:

“ No Federal reserve bank, the Board, the Secretary

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Carbon Accounting

October 10, 2022

Carbon flow, stock and budget according to the recent Geneva Report on Climate and Debt:
Annual global CO2 emissions from fossil fuel and industry: 40 gigatonnes.
Cumulative historical emissions since 1850: 2400 gigatonnes. They are responsible for a temperature rise of 1 degree Celsius.
Remaining carbon budget given 1.5 degree Celsius temperature rise cap: 300 gigatonnes.

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Smart Banknote CBDC

October 9, 2022

Orell Füssli news release:
Orell Füssli Ltd. Security Printing and AUGENTIC GmbH announced their partnership on a “Smart Banknote CBDC” solution including’s Distributed Ledger Technology (DLT) a week ago. A smart banknote is a physical banknote that interacts with a CBDC solution and acts as a transitional device between traditional and CBDC based payment systems. A smart banknote can be used like a classic banknote; however, the owner can redeem his cold wallet (physical banknote) and transfer the note’s value to a digital wallet by scanning the QR code with the private key. Our smart banknote includes a public and a private key represented by QR codes of which the private one is sealed. When the cover of the private key is removed, the QR code scanned, the value of the

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Lucas on an OECD Economic Expert Report

September 22, 2022

In a Carnegie-Rochester paper from 1979, Robert Lucas reviews an earlier report to the OECD by a group of independent experts. Lucas views the report as vacuous, eclectic, and dangerous:
… I know of no other way to convey the Report’s undisciplined eclecticism. It meanders through the long list of issues which have been defined in popular debate as “policy problems,” accepting all as equally suited to treatment by government action and equally amenable to economic expertise, offering ambiguous and unsupported opinion on each. Nowhere can one discern a consistent set of economic principles underlying either the choice of questions to be addressed or the policy stances which are recommended.
As an economist, I find this alarming, but not because I believe the Report will in any direct

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Monetary Policy, the NK Model, and Humility

September 22, 2022

In an NBER working paper John Cochrane concludes that

… we have been guilty of playing with too-complex models when we don’t really understand basics, such as stability, determinacy, and the frictionless limit. …
Given the state of actual agreed-on knowledge, central banks’ proclamations of detailed technocratic ability to manipulate delicate frictions is laughable. Figure 10 shows in chart form the Rube-Goldberg list of mechanisms the ECB thinks it understands and can manipulate. Central bankers who think they have any idea how all these boxes and arrows work, and how to manipulate them, should reread Bob’s unsung classic “on a report to the OECD” Lucas (1979) once a week. A little humility would do us all good.

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Goering About WWII

September 21, 2022

Lost Prison Interview With Hermann Goering: The Nazi Reichsmarschall’s Revelations
[embedded content]

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“Macroeconomics II,” Bern, Fall 2022

September 13, 2022

MA course at the University of Bern.
Time: Monday 10:15-12:00. Location: A-126 UniS. Uni Bern’s official course page. Course assistant: Stefano Corbellini.
The course introduces Master students to modern macroeconomic theory. Building on the analysis of the consumption-saving tradeoff and on concepts from general equilibrium theory, the course covers workhorse general equilibrium models of modern macroeconomics, including the representative agent framework, the overlapping generations model, and the Lucas tree model.
Lectures follow chapters 1–4 (possibly 5) in this book.

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