No. 108, June

In May 2017, the KOF Business Situation Indicator for the Swiss private economy was up slightly again, making this the fifth consecutive rise (see G 9). Economic activity in Switzerland is picking up, albeit with lower momentum than in the past few months.

Putting a number on how effective policymakers are in boosting cross-border trade is important. But doing so in a statistically sound way is not trivial. Peter Egger and Filip Tarlea present a new methodology to identify the causal effect of preferential economic integration agreements. Their methodology finds trade effects that are somewhat smaller than predicted by established, but problematic, procedures.

KOF publishes its Forecasts for Swiss Tourism twice a year. The latest study, which also contains structural analysis of the significance of various accommodation categories, including classic hotels, non-hotel accommodation and Airbnb as separate categories, shows that Airbnb is gaining ground in city destinations and regions with large numbers of holiday apartments.

KOF is carrying out regular surveys among students and their employers to ascertain whether the Framework Curriculum for Business Studies at PET Colleges is still up to date.

Debt shifting is a strategy applied by multinational firms to shift profits from high-tax to low-tax countries. Because interest payments on debt are generally tax deductible, while opportunity costs of equity are not, multinational firms can reduce their overall corporate tax payments by financing a related affiliate in a high-tax country with loans provided by another affiliate located in a low-tax country. Mohammed Mardan explains in a new paper why thin capitalisation rules vary across countries.

Nighttime lights data captured by satellites can provide useful information regarding the current economic activity across countries and regions, and also for the prediction of future developments. In a recently published KOF Working Paper, Jaqueson K. Galimberti presents his latest research and promising results favouring the use of this innovative source of data for macroeconomic measurement and forecasting.