Extrait
What Drives the Swiss Franc?
1 Introduction
This paper assesses the potential factors influencing the evolution of the Swiss franc exchange rates. As no encompassing theoretical framework exists in the literature, I use an empirical approach coined in the literature as the Behavioral Equilibrium Exchange Rate (BEER) approach, and analyze what drives the evolution of CHF relative to the euro, the US dollar and the 24 main trading partners of Switzerland.Many factors can potentially drive currency developments. This paper discusses the main factors usually considered in the vast empirical literature on exchange rates and for which reliable data is available. I start in section 2 by displaying the behavior of the different Swiss franc real exchange rates. Then, in section 3, 1 discuss potential determinants of the Swiss franc and present econometric results. I distinguish between relative tradable and non-tradable good price movements, and argue that different CHF exchange rates can be characterised differently in that respect. Direct and indirect evidence on Balassa-Samuelson effects, the most common argument to explain relative tradable vs. non-tradable good price developments, are then presented and related to real exchange rate movements in light of historical and structural developments in order to shed some light on the evolution of CHF exchange rates. I then discuss and quantify the effects of other main factors usually studied in the empirical exchange rate literature, like accumulated current accounts...Voir le contenu complet de ce document
Liens sponsorisés
