ECONOMIC POLICY IN SWITZERLAND

ECONOMIC POLICY IN SWITZERLAND

Economic Policy in Switzerland Edited by Philippe Bacchetta and Walter Wasserfallen

First published in Great Britain 1997 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-25877-2 ISBN 978-1-349-25875-8 (ebook) DOI 10.1007/978-1-349-25875-8 First published in the United States of America 1997 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-17619-8 Library of Congress Cataloging-in-Publication Data Economic policy in Switzerland 1 edited by Philippe Bacchetta and Walter Wasserfallen. p. cm. Includes bibli02raphical references and index. ISBN 978-0-312-17619-8 I. Switzerland-Economic policy. 2. Switzerland-Economic conditions-1945- I. Bacchetta, Philippe. II. Wasserfallen, Walter. HC396.E36 1997 338.9494--dc21 97-8644 CIP Selection and editorial matter @ Philippe Bacchetta and Walter Wasserfallen 1997 Chapter I @ Philippe Bacchetta and Walter Wasserfallen 1997 Chapters 2-10 @ Macmillan Press Ltd 1997 Softcover reprint of the hardcover 1st edition 1997 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 2 I 06 05 04 03 02 01 00 99 98 97

Contents List of Tables and Figures Notes on the Contributors vii ix 1 Introduction Philippe Bacchetta and Walter Wasser/allen 1 2 Recent Developments in Swiss Monetary Policy Hans Genberg and Ulrich Kohli 8 Comment Georg Rich 30 3 Swiss Competition Policy in the Last Decade Damien Neven and Thomas von Ungern-Sternberg 35 Comment Winand Emons 58 Comment Pierre Tercier 60 4 Unemployment and Unemployment Insurance in Switzerland George Sheldon 62 Comment Serge Gaillard 93 Comment Stefan C. Wolter 96 5 Discrimination in the Labor Market: A Gender Perspective Renate Schubert 98 Comment Henriette EngeJhardt ll8 Comment Yves FJiickiger 121 6 Poverty and Social Policy: An Overview Robert E. Leu, Stefan Burri and Peter Aregger 123 Comment Hans Schmid 148 Comment Ludwig Gartner 150 v

vi Contents 7 Swiss Health Policy Peter Zweifel 152 Comment Jean-Christian Lambelet 180 Comment Thomas Zeltner 182 8 Environmental Policy in Switzerland: Methods, Results, Problems and Challenges Gebhard Kirchgiissner 184 Comment Georg Miiller-Fiirstenberger 213 9 Housing Policy towards Ownership in Switzerland Philippe Thalmann 214 Comment Henner Kleinewefers 243 Comment Rudolf H. Strahm 245 10 Deregulation and Privatisation: Evidence from the Telecommunications Industry in Europe and Implications for Switzerland Walter Wasseifallen and Stefan Muller 249 Comment Rajna Gibson 271 Comment Jiirg Bucher 274 Index 277

List of Tables and Figures Tables 2.1 Inflation rates in DECD countries, 1973-94 14 4.1 Absorption of employment declines during recessions, 1974-76 and 1991-93 63 4.2 VI outlays on the unemployed, 1990-94 74 4.3 Regression results for continuation rates 80 4.4 Regression results for various components of unemployment 82 4.5 Impact of entitlement extensions on paid-out VI benefit payments, 1994 84 4.6 Effects of a I-year cyclical upswing, a I-year trend and VI changes on various dimensions of unemployment 85 6.1 Aggregate poverty and poverty intensity in Switzerland, 1992 (poverty line SFr. 11 760 per year) 134 6.2 Aggregate poverty and poverty intensity in Switzerland, 1992 (poverty line SFr. 15 420 per year) 136 6.3 Consumer durables, by resource category 139 6.4 Living conditions, by resource category 140 6.5 Main federal social security programs in Switzerland, 1992 142 6.6 Cantonal and communal social security programs, 1992 144 7.1 Key data for the Swiss health care sector, 1970-90 153 7.2 Structure of public health care expenditure (HCE) in Switzerland, 1970-90 170 8.1 Final use of fossil fuels, by different groups of consumers, 1950-94 190 8.2 Tax rates and relative price increases of the CD 2 tax 193 9.1 The size of the owner-occupied housing sector in DECD countries 215 9.2 The size of the owner-occupied housing sector in Switzerland, 1950-90 215 9.3 The share of residential construction in GDP in DECD countries, 1990 221 10.1 Telecommunication services in European countries, 1994 and 1995 252 vii

viii List of Tables and Figures 10.2 British Telecom, before and after privatisation, 1981-95 258 10.3 Comparison across countries: accounting ratios, 1994 261 10.4 Comparison across countries: telephone tariffs, May 1995 263 10.5 Stock market performance, 1985-95 265 Figures 2.1 Growth rates of monetary aggregates, 1973-95 2.2 CPI inflation rates, 1973QI-1995Ql 2.3 Nominal exchange rates, 1973QI-1995Ql 2.4 Actual values of MO and the pre-announced medium-term target paths, 1984-99 4.1 Unemployment and maximum length of UI entitlement, 1971-96 4.2 Matrix of transition probabilities 4.3 Escape rates from unemployment 7.1 A systems analysis of health care 7.2 A simple model of the hospital 10 11 11 18 64 67 75 155 166

Notes on the Contributors Peter Aregger, Research Assistant in Economics, UniversiUit Bern. Philippe Bacchetta, Deputy Director, Studienzentrum Gerzensee, Professor of Economics, Universite de Lausanne, and Research Fellow, CEPR. Jiirg Bucher, Head of Marketing, Swiss Postal Office, Bern. Stefan Burri, Research Assistant in Economics, UniversiUit Bern. Winand Emons, Professor of Economics, UniversiUit Bern and Research Fellow, CEPR. Henriette Engelhardt, Research Assistant in Sociology, Universitat Bern. Yves Fliickiger, Professor of Economics, Universite de Geneve. Serge Gaillard, General Secretary, Swiss Labor Union. Ludwig Gartner, Head of Social Policy and Research Department, Federal Social Insurance Office, Berne. Hans Genberg, Professor of Economics, Graduate Institute of International Studies Geneva. Rajna Gibson, Professor of Finance, Universite de Lausanne. Gebhard Kirchgiissner, Professor of Economics, Universitat St. Gallen. Henner Kleinewefers, Professor of Economics, Universite de Fribourg. Ulrich Kohli, Professor of Economics, Universite de Geneve. Jean-Christian Lambelet, Professor of Economics, Universite de Lausanne. Robert E. Leu, Professor of Economics, Universitat Bern. Stefan Miiller, Research Assistant in Economics, Universitat Bern. Georg Miiller-Fiirstenberger, Research Assistant in Economics, Universitat Bern. Damien Neven, Professor of Economics, Universite de Lausanne, and Research Fellow, CEPR. ix

x Notes on the Contributors Georg Rich, Chief Economist, Swiss National Bank, Zurich. Hans Schmid, Professor of Economics, UniversiUit St. Gallen Renate Schubert, Professor of Economics, Eidgenossische Technische Hochschule Zurich. George Sheldon, Professor of Economics, Universitat Basel. Rudolf H. Strahm, President, Swiss Tenants' Association, Zurich. Pierre Tercier, President, Swiss Competition Commission, Berne, and Professor of Law, Universite de Fribourg. Philippe Thalmann, Professor of Construction Economics, Ecole Poly technique Federale de Lausanne. Thomas von Ungern-Sternberg, Professor of Economics, Universite de Lausanne. Walter Wasserfallen, Director, Studienzentrum Gerzensee, Professor of Finance, Universitat Bern, and Research Fellow, CEPR. Stefan C. Wolter, Head of the Service for Economic Affairs, Swiss Federal Office for Industry and Labor, Berne. Thomas Zeltner, Director, Federal Office of Health Care, Berne. Peter Zweifel, Professor of Economics, Universitat Zurich.