Medium and Long-Term Scenarios

What we do

Evaluating the resilience of an economy to new or unusual macroeconomic shocks is difficult due to data limitations. But economic theory, disciplined by the data we do have, gives us an internally consistent framework for evaluating the future evolution of the economy.

Our section of KOF Lab strives to use macroeconomic theory to understand how the Swiss economy would react to domestic and global economic scenarios, especially ones that are relatively intractable from a purely empirical perspective.

How we work

We use two sets of models. First, we have developed a global general equilibrium model that accounts for production networks and trade with respect to many industries and countries. The model, which is based on the frontier of academic research in trade theory, can answer questions like: which sectors in Switzerland would gain or lose from trade wars external to Switzerland?

Second, we are developing a dynamic stochastic general equilibrium (DSGE) model specific to Switzerland. The model will provide insight on, for example, the medium-term response of the Swiss economy to domestic and foreign demand shocks.

In addition to providing scenario analysis for the Swiss economy, we strive to produce leading academic work in economic theory, with a focus on macroeconomics.