Institutions for Crisis Prevention: the Case of Switzerland. (11th July 2013)

• Record Type: Journal Article
• Authors: Baur, Martin; Bruchez, Pierre‐Alain; Schlaffer, Barbara
• Is Part Of: Global policy. Volume 4(2013)Supplement 1
• Page Start: 10
• Page End: 21
• Publication Date: 2013-07-11
• Subjects: Globalization -- Periodicals; International relations -- Periodicals; World politics -- Periodicals; 327.1705
• DOI: 10.1111/1758-5899.12056
• Languages: English
• ISSNs: 1758-5880

Abstract

Abstract: The Swiss economy's comparatively robust performance in the current economic crisis is partly the result of its characteristics, but public institutions also made Switzerland resilient. We focus here on institutions that foster sound public finances. The Swiss federal debt brake played a key role in keeping the federal debt in check; along with fiscal rules, institutions such as direct democracy and federalism counteract the biases that tend to make elected representatives less fiscally conservative than citizens. This leads to more well‐targeted public expenditure and greater public efficiency and helps to avoid excessively high taxes. These features are beneficial in ordinary times, and they increase the scope of action in times of crisis. Abstract : 'The comparatively robust performance of the Swiss economy in the current economic crisis is partly due to characteristics of the Swiss economy.' The authors of this article focus on the kind of economic institutions and fiscal rules which have led to sound public finances in Switzerland. They argue that these rules and institutions could be used as a model elsewhere to foster economic stability in times of crisis and beyond.