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Monetary policy during the Covid-19 crisis: What challenges lie ahead for the Swiss National Bank?

This article originally appeared in french in Le Temps on 4 January 2020 The Pandemic caused severe recessions in Switzerland and abroad. Although the Swiss economy rebounded strongly in the third quarter, an uncertain health and economic outlook, as well as dwindling foreign demand keep economic activity below its pre-crisis level. The worsening health situation in the fourth quarter, along with the state-mandated closures of businesses, further delay the recovery.  The peculiarity of the economic impact of the pandemic should be reflected in the policy response. Many economists agree: firms should be generously compensated by fiscal authorities if they are subject to state-mandated closures. In addition, extended or even more generous short-term work can provide a lifeline until the health situation is under control; unemployment insurance can guarantee an income if workers still lose their jobs. These examples show that fiscal policy and automatic stabilizers take center stage to d

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