Political Economy of the Swiss National Bank examines whether there exists any systematic political influence on Swiss monetary policy. A partial adjustment model is used to derive the reaction functions. Models of political business cycles and the theory of legislative control are for the first time applied to the Swiss institutional setting. The inflationary performance of the National Bank is not explained with the legal relationship between the executive branch of government and the central bank. It is interpreted as the result of the structure of the executive (commission government) and the characteristics of the Swiss political market for monetary policy. In empirical tests no indirect political influence, defined as a systematic relationship between fiscal and monetary policy, and no direct political influence from elections, the executive and the legislature can be detected.

Inhalt

A Reaction Function Study for the Swiss National Bank: Introduction; The Concept of Reaction Functions; Reaction Function for the SNB; The Data; Results: How the SNB Behaved; Conclusions.- Deficits and Money Growth: Empirical Evidence for Switzerland: Introduction; Budget Deficits and Money Growth; Previous Studies on the Impact of Fiscal Policy Variables on Swiss Monetary Policy; The Money Growth Equations; The Fiscal Data; Estimation Results; Conclusions.- Elections and Monetary Policy: Is There a Political Monetary Cycle for Switzerland?: Introduction; Models of Politico-Economic Cycles: An Overview; Application to Switzerland: Why Should There Exist a Political Monetary Cycle?; Comparing Economic Conditions for Election and Nonelection Years; Testing for Political Monetary Cycles; Conclusions.- The Executive Central Bank Relationship: The Case of Switzerland: Introduction; The Legal Relationship Between Executive and Central Bank; Inflationary Performance as a Result of the Structure of the Executive; Inflationary Performance as a Result of Characteristics of the Swiss Political Market for Monetary Policy; De Facto (In)Dependence of the SNB: An Empirical Test; Conclusions.- Legislative Influence on Monetary Policy? The Case of Switzerland: Introduction; The Theory of Legislative Influence (or the 'New' Theory of Bureaucracy); Application of the 'New' Theory of Bureaucracy to Central Banks: Legislative Influence on the Federal Reserve; Legislative Influence on SNB Behavior?; Conclusions.