"Our goal is a symbiosis of economic research and data science"

What ideas have you implemented in the past year?
We have established our quarterly economic report, which previously formed part of KOF Analysen, as a stand-alone publication. It is now leaner, more visual and more concise. We have developed an interactive online tool for forecast visualisation purposes. We have also devised a new structural equation model featuring an innovative estimation procedure. This model is designed to improve forecasting quality and to map uncertainties more precisely and intuitively. In addition, the output gap and economic cycles will play a more prominent role in the new model. The model calculates a trend as a long-term anchor and then any deviation from it.

How are the economic forecasts being methodologically refined?
A major focus is on expanding the range of models. We plan to utilise several forecasting models simultaneously to an even greater extent than in the past in order to gain insights into the strengths of the respective models. We have already started to do this and intend to push ahead with it. We aim to apply our findings from the field of data science to economic forecasting and thus achieve a symbiosis between these two areas.

Apart from economic forecasting, what are your main areas of research?
My research focuses on empirical macroeconomics. I am particularly interested in how monetary policy, fiscal policy and the business cycle interact with each other. I apply two methodological approaches. One is time-series analysis and the other is survey experiments. Time-series analysis can only depict causalities with some difficulty. This is easier with survey experiments using control groups. On the other hand, time-series analysis has the advantage of better capturing economic relationships over longer periods of time and using them for forecasting and analysis purposes.

Does the balancing act between economic forecasting and research pose an obstacle to academic work?
No, quite the opposite. I like to draw inspiration for my research from economic reality. I think that KOF’s positioning of itself somewhere between academic research and the real economy is a successful model and was the reason why I joined KOF in 2009 and have stayed here for so long.

Economics has many interesting neighbouring disciplines such as psychology, philosophy, sociology, political science and history. Which of these fields interests you the most?
My background is in economic history and I wrote my doctoral thesis on this subject. A lot can be learnt from history. In an essay co-authored by Albrecht Ritschl, for example, I showed external pagethat the Great Depression of the 1930s did not originate solely in the United States but also had its roots in Germanycall_made.

How do you and your team currently assess the economic situation in Switzerland?
We expect the economy to recover from the second half of 2024 onwards, driven by global demand and a dynamic industry. This positive development will be accompanied by an increase in investment demand. Despite weak GDP growth, we expect solid employment growth and low unemployment. Real wage gains should also be possible again in the forecast period.

Has inflation been beaten?
Inflation has recently fallen again and is clearly within the Swiss National Bank's (SNB) target range. In our forecast, we also do not expect inflation to rise again. We can therefore currently say that inflation is under control and poses no immediate threat.

The European Central Bank (ECB) has initiated a turnaround in interest rates and lowered them by 0.25 percentage points. What do you think of this decision?
The ECB's decision to cut interest rates by 0.25 percentage points is understandable given the current inflation trend in the eurozone. The Governing Council of the ECB has decided to moderate the degree of monetary policy restriction due to declining price pressure. The interest rate cut therefore appears to be a sensible step to support the economic recovery.

What signalling effect will the interest rate turnaround in the eurozone have on the US Federal Reserve (Fed) and the SNB?
The impact of the interest rate turnaround in the eurozone on the Fed is limited, as inflation is developing differently in these two economies. While price pressure is slowly easing in the eurozone, the Fed is still struggling with stubbornly high inflation. In contrast, the European economy is still struggling with a persistently weak economy. The central banks therefore currently have different priorities and challenges. For the SNB, the turnaround in interest rates gives it more room for manoeuvre to cut the key interest rate further.