Authors: Katerina Gawthorpe
Addresses: Department of Managerial Economics, University of Economics, Prague, W. Churchill Sq. 4, 130 67 Prague 3, Czech Republic
Abstract: This case study outlines an empirical analysis of factors explaining the substantial demand for the oldest and the largest private currency, Switzerland's Wirtschaftsring (WIR). The method of analysis consists of vector autoregressive (VAR) models accompanied by a vector error correction model (VECM). First, the empirical analysis proves that WIR circulates as a substitute to the Swiss Franc. This result warrants the construction of a subsequent model to reveal the characteristics responsible for the switch. The variables of interest consist of the inflation rate and the interest rate for the Swiss Franc and the Swiss gross domestic product (GDP). The outcome supports an elevation of demand for the WIR currency in times connected with higher inflation for the Swiss Franc and more expansive credit denominated in the national currency. Finally, the WIR demand appears to behave countercyclical in respect to the Swiss GDP.
Keywords: Switzerland's Wirtschaftsring; WIR currency; alternative currency; local money; Switzerland.
International Journal of Monetary Economics and Finance, 2019 Vol.12 No.5, pp.343 - 360
Received: 15 Dec 2018
Accepted: 05 Jun 2019
Published online: 03 Oct 2019 *