Inflation and unemployment in Switzerland: from 1970 to 2050

We have started writing a new monograph. As always, it’s an exciting process. This time we would like to collect all results on inflation and unemployment in OECD countries and to carry out a rigorous statistical analysis. We include only those OECD members who provide an extensive statistics on inflation, unemployment and labor force. As a result, some countries will not be modeled.

Switzerland was not fully modeled in our monograph on mechanomics. We have written a paper and submitted it to the MPRA. Now it is available via RePEc:

Inflation and unemployment in Switzerland: from 1970 to 2050

An empirical model is presented linking inflation and unemployment rate to the change in the level of labour force in Switzerland. The involved variables are found to be cointegrated and we estimate lagged linear deterministic relationships using the method of cumulative curves, a simplified version of the 1D Boundary Elements Method. The model yields very accurate predictions of the inflation rate on a three year horizon. The results are coherent with the models estimated previously for the US, Japan, France and other developed countries and provide additional validation of our quantitative framework based solely on labour force. Finally, given the importance of inflation forecasts for the Swiss monetary policy, we present a prediction extended into 2050 based on official projections of the labour force level.

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