Swiss Journal of Economics and Statistics

, Volume 145, Issue 4, pp 463–483 | Cite as

How to Explain the High Prices in Switzerland?

Open Access


This article challenges the view that a lack of competition and a high level of regulations are the main causes of Switzerland’s high prices. First, we point out a number of stylized facts which are inconsistent with this popular view. Second, we econometrically asses the “competition-regulation hypothesis” together with the well-established determinants from the real exchange rate literature in a panel of 22 OECD countries from 1970 to 2004. We find that changes in the terms of trade and the degree of openness, and to a minor extent in government expenditures and the current account, explain the movements in the Swiss real exchange rate reasonably well over the last 35 years. Changes in regulations and competition as well as in relative productivities perform poorly as explanatory variables.


F14 N74 


real exchange rate terms of trade Balassa-Samuelson regulations Switzerland 


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Copyright information

© Swiss Society of Economics and Statistics 2009

Authors and Affiliations

  1. 1.Faculty of Business and EconomicsUniversity of BaselSwitzerland
  2. 2.University of BaselBaselSwitzerland

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