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| Kugler, Peter; Weder, Beatrice. |
| This paper contributes to the debate about the puzzle of the Swiss Interest Rate Island. It starts out by establishing some stylized facts about the nature of the puzzle. First it shows that long run real returns on Swiss Euro Deposits have been significantly lower than in any other major currency. A decomposition of return differentials into deviations from uncovered interest rate parity and deviations from purchasing power parity reveals that the former contributes most to the puzzle. Two implications follow from these stylized facts: (i) since the puzzle is present in Euro Deposit rates it cannot be due to local factors such as banking secrecy, and (ii) solutions to the puzzle have to provide an explanation for a long run failure of uncovered interest... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Financial Economics; E43; E44; G15. |
| Ano: 2002 |
URL: http://purl.umn.edu/26190 |
