Grundlagen für die Wirtschaftspolitik

Since the end of the 1980s, interest rates have fallen both nominally and in real terms worldwide. This development can also be observed in Switzerland. This study examines both the causes and effects of the current low-interest phase. The empirical results on a macroeconomic level, in line with empirical literature, indicate that a significant part of the decline in real interest rates can be explained by demographic factors. The age structure in particular shows a correlation to the development of interest rates. In the post-war period, the proportion of 40-64-year-olds is significantly negative and the proportion of 15-39-yearolds is significantly positively linked to the real interest rate. The model results also indicate that there will be no additional downward pressure on real interest rates from the development of the age structure in Switzerland for years to come. However, the study did not take into account all possible effects of interest rates, so that no forecast of actual interest rate developments can be derived from the results. The effects of low interest rates are the focus of the second part of the report. A macroeconometric model analyses the impact of interest rate changes on consumption, saving and investment in the short to medium term. The results show that an exogenous one-percentage-point rate increase has a negative impact on real GDP, consumption, savings and investment. In order to obtain immediate estimates for Switzerland, the effects of real interest rates on the consumption and savings choices of private households and on the investment decisions of companies in Switzerland were estimated. The relationship between real interest rates and private investments is analysed using data from the KOF investment survey. The results indicate that companies are increasing capital expenditures as real interest rate expectations decline. A one percentage point lower real interest rate increases companies' investment plans on average by more than ten percent. In the case of equipment and construction investments, a reduction of the real interest rate by one percentage point results in an increase in these investment categories by 11.5% and 13.3% respectively. In the case of investments in research and development, the correlation with real interest rates is not visible in the data. These categories of expenditure, which are particularly important for long-term economic development, are more closely linked to the future prospects of companies. The effects of real interest rates on the individual consumer and savings behaviour of Swiss households are examined with the help of the SECO’s consumer sentiment survey. The results indicate that households are deferring larger purchases with higher inflation expectations and thus lower real interest rates. At the same time, they expect to save less. This suggests that households, in conjunction with rising inflation, are also expecting income declines. The results therefore do not show a one-dimensional effect of the real interest rate on the consumption and savings rate. While the macro data suggest that falling interest rates cause increased consumption, according to the consumer survey, if they are associated with poorer future prospects, the effect is reversed.

Staatssekretariat für Wirtschaft SECO

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