Dirk Niepelt

June 1st marks the official opening of the longest railway tunnel on Earth, cutting through the Alps. Official website. Profile of the rail track between Zurich and Lugano. Report about the contender.

In the FT, John Kay points out that basic income proposals have one major drawback: They are very—expensive. Not everyone agrees. Switzerland will hold a national referendum on the introduction of an unconditional basic income on June 5th, 2016. The supporters of the proposal write: A basic income already exists today. Everyone obtains one from somewhere; otherwise we would not be able to live. In our society today, no one can survive without an income. The level of a basic income is...

In the FT, Martin Wolf discusses Mervyn King’s proposal to make the central bank a “pawnbroker for all seasons” as laid out in King’s recent book “The End of Alchemy.” Lord King offers a novel alternative. Central banks would still act as lenders of last resort. But they would no longer be forced to lend against virtually any asset, since that very possibility must create moral hazard. Instead, they would agree the terms on which they would lend against assets in a crisis, including...

In the Richmond Fed’s Econ Focus, Eric Leeper explains his views. Disparate confounding dynamics and simple policy rules: My view is that central banks have put far too many resources into understanding tiny fluctuations and too few resources into the things that actually matter. … Something like the basic Taylor rule doesn’t really serve as a useful litmus test for what policy is doing in the face of these DCDs, so it’s a little bizarre to me that a lot of central banks routinely calculate...

On VoxEU, Torben Andersen and Jonas Maibom point out that empirical findings of a positive correlation between efficiency and equity need not contradict elementary theoretical predictions. The trade-off [between efficiency and equity] applies at the frontier of the possibility set of combinations of economic performance and income equality available to policy makers. If policies and institutions are ‘well-designed’, the country is at the frontier. There is no free lunch and a trade-off...

In the NZZ, Michael Schaefer reports about a study that analyzes the portfolio composition of public sector entities and social security institutions. Cantons and the Federation mostly hold cash. The SNB’s portfolio is among the riskiest.

He wants to “fix the country the right way and from the ground up.” His economic policy proposals are well known (among economists), see here. He also wants to confront North Korea and Iran.

In the FT, Mehreen Khan offers a “Greek debt dilemma cheat sheet.” Face value: EUR 321 billion, thereof EUR 248 billion owed to official creditors. Official creditors: Eurozone countries (Greek loan facility), eurozone rescue funds (EFSF and ESM), IMF, ECB. Maturity profile: IMF proposal for restructuring:

In the FT, Ralph Atkins and Thomas Hale report that senior creditors will effectively receive 90 percent of their money back. An earlier post covered the background of the bank failure.

In the NZZ, Heidi Gmür discusses some of the many forms of government support for agricultural producers in Switzerland. She lists: Direct payments: CHF 2.8 billion for 53’000 farms in 2016 (roughly CHF 50 thousand per farm). Tariffs and other protectionist measures: According to the OECD, the value for farmers of these measures amounts to CHF 2 billion annually, while the value for the country is negative (CHF -0.5 billion). Multiple tax breaks: Lower capital gains tax on land sales; no...