Discussion Paper

No. 2017-95 | November 14, 2017
Did the exchange rate interventions enhance inflation in Switzerland?


For nearly five years, the Swiss National Bank intervened against the Swiss franc to prevent increase of deflation pressures. An unexpected switch in monetary policy was made in January 2015, and the regime was abandoned. In this paper, the authors examine the exchange rate influence on the inflation in Switzerland, separately for the pre-crisis and the intervention period. Using autoregressive models, they quantify the extent of pass-through of an exchange rate shock to different price indices. The results suggest that the exchange rate interventions did indeed enhance the exchange rate pass-through into inflation. Despite the effect’s moderate influence, the decline was not immediate. The authors additionally analysed long-term exchange rate pass-through. The examination reveals that the long-term behaviour arises rather from the intervention than from the pre-crisis period. The exchange rate effect on inflation was thus in a better accordance with theory during the intervention period. As such, currency depreciation did have a positive effect on inflation in Switzerland.

Data Set

  • data.xls
    [application/vnd.ms-excel, 58K]

JEL Classification:

C32, E31, E52


  • Downloads: 130


Cite As

Libor Žídek and Magdalena Šuterová (2017). Did the exchange rate interventions enhance inflation in Switzerland? Economics Discussion Papers, No 2017-95, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2017-95

Comments and Questions

Anonymous - Referee Report 1
January 04, 2018 - 07:29

see attached file

Magdalena Šuterová - Reply_1
January 20, 2018 - 16:14

Reply to referee report 1

Anonymous - Referee Report 2
January 15, 2018 - 10:28

see attached file