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Switzerland. It also introduced a "debt brake" in 2003 [1]. Seeing where we stand now this was quite a visionary step. Switzerland paid for it with slower grow

by mkuhn 15y ago

Switzerland. It also introduced a "debt brake" in 2003 [1]. Seeing where we stand now this was quite a visionary step. Switzerland paid for it with slower growth etc. but is now one of the countries with the healthiest Budget (a feat especially considering Switzerland does not have any natural resources) and one of the few (besides Singapore and Norway I think) that is not in danger of losing its Triple-A ratings. [1] http://en.wikipedia.org/wiki/Balanced_budget_amendment#Switzerland http://en.wikipedia.org/wiki/Balanced_budget_amendment#Switz...

gahahaha 15y ago
Thanks for the link. My first thought was that it would be a potential disaster like the inflexible and pro cyclical American balanced budget laws, but the Swiss law seems very reasonable """It states that each year, the budget must be in balance, adjusted for economic conditions. This adjustment is made by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms.""" Since US GDP is currently far below potential GDP that would seem to allow for a substantial fiscal stimulus right now but force the government to save when the economy is stronger again.
enjoy-your-stay 15y ago
Unfortunately Switzerland didn't manage to dodge the bullet entirely. Many people saw the Swiss Franc as a safe haven currency and massively bought them up, driving up the exchange rate. This caused Switzerland's exports to become uncompetitive which is also slowing what is a very export driven economy. Oddly enough prices haven't really come down domestically either, but neither has unemployment risen that much (despite large layoffs in the financial services sector, particularly in their biggest banks, UBS and Credit Suisse).
- zipdog 15y ago
  Yes, in September this year the Swiss bank took the almost unprecedented step of announcing it would print currency at 'any amount' in order to maintain something like 1.2 with the Euro. Having a huge volume of money seeking safe haven in Swiss Francs has all sorts of destabilizing effects.

by mkuhn 15y ago

gahahaha 15y ago

Thanks for the link. My first thought was that it would be a potential disaster like the inflexible and pro cyclical American balanced budget laws, but the Swiss law seems very reasonable """It states that each year, the budget must be in balance, adjusted for economic conditions. This adjustment is made by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms.""" Since US GDP is currently far below potential GDP that would seem to allow for a substantial fiscal stimulus right now but force the government to save when the economy is stronger again.

enjoy-your-stay 15y ago

Unfortunately Switzerland didn't manage to dodge the bullet entirely. Many people saw the Swiss Franc as a safe haven currency and massively bought them up, driving up the exchange rate. This caused Switzerland's exports to become uncompetitive which is also slowing what is a very export driven economy. Oddly enough prices haven't really come down domestically either, but neither has unemployment risen that much (despite large layoffs in the financial services sector, particularly in their biggest banks, UBS and Credit Suisse).

zipdog 15y ago
Yes, in September this year the Swiss bank took the almost unprecedented step of announcing it would print currency at 'any amount' in order to maintain something like 1.2 with the Euro. Having a huge volume of money seeking safe haven in Swiss Francs has all sorts of destabilizing effects.