28. May 2025
A large literature has analyzed the determinants of urban growth and urban decline. Recent policy measures of the city of St.Gallen targeting the costs of parking and the availability of parking spaces have sparked a public debate in which rising parking costs and limited availability of parking spaces have been linked to a potential downturn of spending at retail stores and restaurants in the inner city of St. Gallen.
On November 1, 2024, the city of St. Gallen increased the fees for parking in the inner city between 7 o’clock in the morning and midnight from CHF 2 to CHF 2.5 per hour, an increase of 25%. During the night and on Sundays the cost remained at CHF 1.5 per hour.
On March 20, 2025, the city of St. Gallen removed 114 street-level parking spaces following the opening of the new parking garage Central, which added 330 new spots. As argued by some critics, the new parking spaces are at a slightly less central location than suggested by the name of the garage. This would risk making the inner city a lost place. The city council argued, however, that the total number of public parking spaces would remain unchanged, under their plans.
In this blog, we try to provide some evidence to inform this debate on the short-term impact of such policy measures, using expenditure data provided by Worldline Schweiz AG, which are used for the dashboards of Monitoring Consumption Switzerland (MCS). We estimate how parking costs and availability affect point-of-sale spending in the inner city. To this end, we compare expenditures in the merchant categories retail: other goods, retail: food, beverage and tobacco,and food & beverage services[1] during the six weeks before the respective event with the expenditures during the six weeks after the event. We do this for the inner city of St. Gallen (aggregating expenditures made at the point-of-sale within the postal code 9000) and then compare the expenditure changes with the changes observed in other comparable inner cities.[2]
The point estimates plotted in Figure 1 summarize our findings. They show that expenditures in the inner city of St. Gallen decreased by 5% after the increase of the parking costs on November 1, 2024, and 3% after the changes in available parking spaces on March 20, 2025. The 95%-confidence intervals show, however, that the estimated effects are noisy so that they are not statistically significant at conventional levels.[3]
Figure 1: Differences in expenditures in retail and restaurants at the point-of-sale, around events affecting the costs and availability of parking in the inner city of St. Gallen.
Notes: Differences in percent of the expenditures in the six weeks before the respective policy change. 95% confidence intervals, not accounting for correlation of the error terms within a postal code. Bootstrapped standard errors accounting for such correlation structure of the error terms result in substantially wider confidence bounds. St. Gallen: inner city with postal code 9000. Comparison group: synthetic group composed of the inner cities of Frauenfeld, Kreuzlingen, Rapperswil−Jona, Rorschach, Wil (SG), Winterthur. The figure displays the changes in percent of the expenditures during the six weeks prior to the respective event in the inner city of St. Gallen.
Thus, there is some indication that expenditures at merchants in the inner city of St. Gallen have decreased slightly after the recent changes in the costs and availability of parking spaces, but the effects are small and not estimated precisely. Further analysis shows that reduced expenditures in retail stores rather than restaurants imply the small, estimated drop in expenditures, but the negative effect remains insignificant even when we only focus on retail expenditures. Note that the estimated changes refer to the inner city as a whole and do not rule out the possibility that certain merchants may have been affected more.
Our analysis relies on the assumption that there are no spillover effects to the inner cities that are contained in the synthetic control group. Indeed, if changes in parking costs and availability have redirected spending from St. Gallen to nearby cities, this would complicate the interpretation of the results. Such spillovers would bias the estimates downward so that they become more negative. In this case, the true (unbiased) impact of the policy measures would be even smaller in absolute terms. The findings should therefore be viewed as an initial step toward understanding the effects of the new parking policies on spending in the inner city of St. Gallen.
[1] The merchant category codes associated with retail: other goods, retail: food, beverage and tobacco, and food & beverage services are documented here.
[2] We use the postal codes of the (inner) cities of Frauenfeld, Kreuzlingen, Rapperswil−Jona, Rorschach, Wil (SG), Winterthur. We construct a synthetic control group by weighing expenditures made in these (inner) cities so that the expenditure trends in this control group between 2022 and 2024 are comparable to the trend observed in the inner city of St. Gallen.
[3] In fact, the estimates are noisier than suggested by the 95% confidence intervals reported in Figure 1, which do not account for the correlation of the estimated residuals at merchants in the same postal code. Bootstrapped standard errors accounting for such a correlation structure of the error terms result in even wider confidence bounds than reported in Figure 1.