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Business Cycles Association in a Small Monetary Union: The Case of Switzerland

  • Alexandra Ferreira-Lopes
  • Tiago Neves Sequeira

With its German, French, Italian, and Romansch Cantons, the Helvetic Federation is a small-scale version of the cultural, social, religious, and linguistic heterogeneities found in the European Union (EU). Although it is an interesting case study for observing the effects of idiosyncratic shocks within regional economies, few studies have been conducted that address Switzerland and the lessons it might hold for the EU, especially for the members of the European Monetary Union (EMU). We study the connections between the business cycles of Swiss regions. Evidence shows that Swiss cantons are closely related but there are dynamic effects toward more ‘independent’ business cycles. Despite the economic and cultural heterogeneity, Swiss cantons remain in the same political and monetary union, sharing a common central bank and a coordination/equalization mechanism for managing independent fiscal policies. Switzerland's ability to do these things should be a matter of interest to the EU. avec ses cantons de langue allemande, française, italienne et romanche, la Confédération helvétique est une version à petite échelle de l'hétérogénéité culturelle, sociale, religieuse et linguistique, qui caractérise l'Union européenne (UE). Bien qu'il s'agisse d'une étude de cas intéressante, pour l'observation des effets des chocs caractéristiques au sein des économies régionales, bien peu d’études se sont penchées sur la Suisse et les enseignements que l'on pourrait en tirer, notamment pour les membres de l'Union monétaire européenne (UME). Nous étudions les rapports entre les cycles commerciaux des régions suisses, et nous démontrons que bien que les cantons suisses présentent des rapports étroits entre eux, on relève des effets dynamiques visant à des cycles commerciaux plus ‘indépendants’. En dépit de leur hétérogénéité économique et culturelle, les cantons suisses appartiennent toujours à la même union politique et monétaire, avec une banque centrale commune et un mécanisme de coordination/égalisation assurant l'administration de leurs politiques fiscales autonomes. La façon dont la Suisse parvient à faire tout ceci devrait être susciter un certain intérêt pour l'UE. RESUMEN Con sus cantones alemanes, franceses, italianos y romanches, la Federación Helvética es una versión a pequeña escala de la heterogeneidad cultural, social, religiosa y lingüística que se puede ver en la Unión Europea (UE). Aunque es un estudio de caso interesante para observar los efectos de los choques idiosincráticos dentro de las economías regionales, se han conducido pocos estudios que tomen a Suiza como ejemplo y las lecciones que pudiera dar a la UE, especialmente para los miembros de la Unión Monetaria Europea (UME). Estudiamos la conexión entre los ciclos económicos de las regiones suizas. La evidencia demuestra que los cantones suizos tiene una estrecha relación entre sí, pero existen efectos dinámicos hacia ciclos económicos más ‘independientes’. A pesar de la heterogeneidad cultural y económica, los cantones suizos permanecen en la misma unión política y monetaria, compartiendo un banco central comn y un mecanismo de coordinación/ecualización para gestionar políticas fiscales independientes. La capacidad de Suiza para lograr esto debe ser materia de interés para la UE.

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File URL: http://hdl.handle.net/10.1080/17421772.2011.647056
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Article provided by Taylor & Francis Journals in its journal Spatial Economic Analysis.

Volume (Year): 7 (2012)
Issue (Month): 1 (March)
Pages: 9-30

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Handle: RePEc:taf:specan:v:7:y:2012:i:1:p:9-30
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