Monetary policy and the real factors of growth
Ulrich Kohli, Director of the Swiss National Bank
Symposium «Wachstumspolitik und Innovation der Schweiz», Berne, 5 June 2003, 05.06.2003
Complete text in German: "Die Geldpolitik und die realen Wachstumsfaktoren"PDF (64 KB)
By ensuring price stability and the good functioning of the payments system, monetary policy can contribute very significantly to economic welfare, particularly by allowing the economy to reach its full potential. However, one should not expect monetary policy to be able to increase the long-run growth potential of the economy. Indeed, monetary policy has little hold on real variables in the long run, yet for the most part it is precisely real factors that determine growth.
Switzerland's growth performance over the past decade has been disappointing, even though, as a result of improving terms of trade, it tends to be underestimated by real GDP figures. A policy aimed at reviving economic growth must act on its real determinants. Thus, it must mobilise work effort as much as possible, favour investment and the accumulation of capital, allow the gains from international trade to be fully exploited, stimulate technological progress, and ensure the continued attractiveness of the general economic conditions.