Negative Rates and Swiss Export Dynamics: Robust Policy Performance under Varying Interest Rate Volatility

Negative Rates and Swiss Export Dynamics: Robust Policy Performance under Varying Interest Rate Volatility | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Negative Rates and Swiss Export Dynamics: Robust Policy Performance under Varying Interest Rate Volatility Boughabi Houssam This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7699185/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper examines how negative interest rate policies affect exports under stochastic inflation, using Switzerland after the global financial crisis as a case study, when safe-haven inflows into the Swiss franc triggered deflationary pressures. Exports are modeled as a function of inflation changes and policy-controlled short rates, with stochastic dynamics for both inflation and interest rate expectations. Monte Carlo simulations and empirical analysis show that while real exports rose only modestly, simulated exports under negative rates increased more strongly, confirming the policy’s effectiveness in supporting trade. Results further indicate that simulated exports are largely invariant to the Hurst parameter of interest rate volatility. Policy efficiency is thus robust: it works regardless of short- or long-memory volatility. JEL Classification. F41, E52, C15 Macroeconomics Negative interest rates Export dynamics Inflation volatility Stochastic modeling Monetary policy Switzerland Full Text Additional Declarations The authors declare no competing interests. Supplementary Files ModelPythonCode.docx Model Python Code Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7699185","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":519714524,"identity":"473f7797-ecde-4c21-a62b-a779b2abcf6c","order_by":0,"name":"Boughabi Houssam","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA9ElEQVRIiWNgGAWjYBACAwYeEHWAwYCZ+cABUrWwJZCqhYHHgDiHmTPwHnzM8+uOvDk7z8fDBX9s5BnYDz9gulGDW4tlA1+yMW/fM8OdzbwbDs9sSzNs4EkzYM45hsdhB3jMpHl7DjNuOAzUwttwmLGBIYeBOYeNsBb7DYd5Hhzm+fPfvoH/DVDLPwJaeH4cTgRqYTjMw3YgsUECaEtuGx4th/mSDec2HE7e2cxmcJi3LTm5TeKZweHcPjxajvcefPDmz2Hb7fyHH3/m+WNn28+f/PBxzjfcWhiYgZgR2Rkgjx/AowEK/hBWMgpGwSgYBSMYAABudFObf+hDdwAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0009-0005-3492-1910","institution":"National Institute of Statistics and Applied Economics","correspondingAuthor":true,"prefix":"","firstName":"Boughabi","middleName":"","lastName":"Houssam","suffix":""}],"badges":[],"createdAt":"2025-09-24 04:17:43","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7699185/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7699185/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":92259486,"identity":"3963a530-ad5b-4ec1-8da9-85510d9e1807","added_by":"auto","created_at":"2025-09-26 12:23:08","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":307620,"visible":true,"origin":"","legend":"","description":"","filename":"Article6.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7699185/v1_covered_96a999b9-448d-4aef-9848-a1e76509976e.pdf"},{"id":92259484,"identity":"e5dbc1cf-23e1-4c0b-be77-fc23b05b88ca","added_by":"auto","created_at":"2025-09-26 12:23:02","extension":"docx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":24354,"visible":true,"origin":"","legend":"\u003cp\u003eModel Python Code\u003c/p\u003e","description":"","filename":"ModelPythonCode.docx","url":"https://assets-eu.researchsquare.com/files/rs-7699185/v1/7b53ddb5c922656ab6c86845.docx"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eNegative Rates and Swiss Export Dynamics: Robust Policy Performance under Varying Interest Rate Volatility\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"National Institute of Statistics and Applied Economics","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Negative interest rates, Export dynamics, Inflation volatility, Stochastic modeling, Monetary policy, Switzerland","lastPublishedDoi":"10.21203/rs.3.rs-7699185/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7699185/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper examines how negative interest rate policies affect exports under stochastic inflation, using Switzerland after the global financial crisis as a case study, when safe-haven inflows into the Swiss franc triggered deflationary pressures. Exports are modeled as a function of inflation changes and policy-controlled short rates, with stochastic dynamics for both inflation and interest rate expectations. Monte Carlo simulations and empirical analysis show that while real exports rose only modestly, simulated exports under negative rates increased more strongly, confirming the policy’s effectiveness in supporting trade. Results further indicate that simulated exports are largely invariant to the Hurst parameter of interest rate volatility. Policy efficiency is thus robust: it works regardless of short- or long-memory volatility.\u003c/p\u003e\n\u003cp\u003eJEL Classification. F41, E52, C15\u003c/p\u003e","manuscriptTitle":"Negative Rates and Swiss Export Dynamics: Robust Policy Performance under Varying Interest Rate Volatility","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-09-26 12:22:58","doi":"10.21203/rs.3.rs-7699185/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"492ce0ac-5d08-4fa4-a781-5a1405219d8c","owner":[],"postedDate":"September 26th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":55235032,"name":"Macroeconomics"}],"tags":[],"updatedAt":"2025-09-26T12:22:58+00:00","versionOfRecord":[],"versionCreatedAt":"2025-09-26 12:22:58","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-7699185","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-7699185","identity":"rs-7699185","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}