Nr. 164, July

KOF economist Andrin Spescha, author of the book False Feedback in Economics, talks in an interview about the fundamental methodological problems of economics and possible solutions.

The coronavirus pandemic has clearly left its mark on Switzerland’s innovation landscape. More than a quarter of the firms surveyed by KOF have had to adapt their innovation processes significantly or even very significantly owing to the COVID-19 crisis. SMEs, start-ups and multinational corporations have been hit particularly hard. Just under half of these companies report that COVID-19 has meant a reduction in R&D and innovation investment and a decline in innovation collaborations.

Countries, as well as constituent states within countries, compete for high-income taxpayers. Tax competition and attempts to keep aggressive tax practices in check have increased in recent decades. However, even if low income-tax rates attract top earners, this does not necessarily mean that simple tax cuts alone will pay off. Typically, only a combination of measures leads to success.

The KOF Business Situation Indicator rose again in June, reaching a new high for the year to date. The manufacturing sector reckons that its business situation is significantly stronger than it was in the first five months of this year. Overall, the Swiss economy is currently robust.

This year’s investment outlook for Swiss firms has improved this spring compared with the autumn of last year. The results of the semi-annual KOF Investment Survey show that companies plan to increase their fixed capital investment by a nominal 7.5 per cent in 2022. These additional funds will primarily be allocated to construction projects. At the same time, environmental protection continues to gain in importance as an investment motive.

Using Swiss tax data, KOF economists Isabel Z. Martínez and Regina Pleninger are investigating the role of income and wealth over the life cycle as part of an ongoing research project. This article provides an initial insight into this work.