Exchange rates and the Swiss economy

Safe haven capital inflows and other factors have caused the Swiss franc to appreciate and posed challenges for policymakers. We find that these exchange rate changes do not affect the volume of exports from Switzerland’s most advanced sectors, pharmaceuticals and watches, but do matter for exports of medium-high-technology products such as capital goods and machinery. We also report that appreciations do not affect stock prices and goods prices for the pharmaceutical and watch industries but cause both stock and goods prices to tumble for the capital goods and machinery sectors. We draw many policy lessons from these findings for Switzerland and for the rest of the world.