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DIW Discussion Papers 1727 / 2018
This paper introduces a new international longitudinal database of governmental housing policies. The regulations are measured using binary variables based on a thorough analysis of the real-time country-specific legislation. Three major restrictive policies are considered: rent control, protection from restriction, and housing rationing. The database covers 47 countries and states between 1910 and ...
2018| Konstantin A. Kholodilin
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DIW Discussion Papers 1726 / 2018
The transition towards low-carbon economies requires massive investments into renewable energies, which are commonly supported through regulatory frameworks. Yet, governments can have incentives - and the ability - to deviate from previously-announced support once those investments have been made, which can deter investments. We analyze a renewable energy regulation game, apply a model of time-inconsistency ...
2018| Nils May, Olga Chiappinelli
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DIW Discussion Papers 1725 / 2018
This paper analyzes how subjective expectations about wage opportunities influence the job search decision. We match data on subjective wage expectations with administrative employment records. The data reveal that unemployed individuals over-estimate their future net re-employment wage by 10% on average. In particular, the average individual does not anticipate that wage offers decline in value with ...
2018| Sascha Drahs, Luke Haywood, Amelie Schiprowski
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DIW Discussion Papers 1724 / 2018
The European debt crisis has revealed serious deficiencies and risks on a proper functioning of the monetary union. Against this backdrop, early warning systems are of crucial importance. In this study that focuses on euro area member states, the robustness of early warning systems to predict crises of government debt is evaluated. Robustness is captured via several dimensions, such as the chronology ...
2018| Christian Dreger, Konstantin A. Kholodilin
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DIW Discussion Papers 1723 / 2018
A common finding in the entrepreneurship literature is that business creation increases in recessions. This counter-cyclical pattern is examined by separating business creation into two components: “opportunity” and “necessity” entrepreneurship. Although there is general agreement in the previous literature on the conceptual distinction between these two factors driving entrepreneurship, there are ...
2018| Robert W. Fairlie, Frank M. Fossen
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DIW Discussion Papers 1722 / 2018
We study the state-dependent trading behavior of financial intermediaries in the oil futures market, using structural vector autoregressions with Markov switching in heteroskedasticity. We decompose changes in futures price volatility into changes in the slopes of traders' demand curves and in the variability of their demand shocks. We find that the downward-sloping demand curve of intermediaries steepens ...
2018| Daniel Bierbaumer, Malte Rieth, Anton Velinov
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DIW Discussion Papers 1721 / 2018
We study the characteristics of inflation targeting as a shock absorber, using quarterly data for a large panel of countries. To overcome an endogeneity problem between monetary regimes and the likelihood of crises, we propose to study large natural disasters. We find that inflation targeting improves macroeconomic performance following such exogenous shocks. It lowers inflation, raises output growth, ...
2018| Marcel Fratzscher, Christoph Grosse Steffen, Malte Rieth
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DIW Discussion Papers 1720 / 2018
Despite considerable policy efforts, women continue to be underrepresented in positions of power and decision making. As an important aspect of women empowerment, we examine women’s participation in intrahousehold financial decision making and how this is affected by financial literacy. Using both OLS and IV regression analysis, we show that women with higher financial literacy are more involved in ...
2018| Antonia Grohmann, Annekathrin Schoofs
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DIW Discussion Papers 1719 / 2018
This paper applies long-memory techniques (both parametric and semi-parametric) to examine whether Brexit has led to any significant changes in the degree of persistence of the FTSE 100 Implied Volatility Index (IVI) and of the British pound’s implied volatilities (IVs) vis-à-vis the main currencies traded in the FOREX, namely the euro, the US dollar and the Japanese yen. We split the sample to compare ...
2018| Guglielmo Maria Caporale, Luis A. Gil-Alana, Tommaso Trani
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DIW Discussion Papers 1718 / 2018
This paper examines price overreactions in the case of the following cryptocurrencies: BitCoin, LiteCoin, Ripple and Dash. A number of parametric (t-test, ANOVA, regression analysis with dummy variables) and non-parametric (Mann–Whitney U test) tests confirm the presence of price patterns after overreactions: the next-day price changes in both directions are bigger than after “normal” days. A trading ...
2018| Guglielmo Maria Caporale, Alex Plastun
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DIW Discussion Papers 1717 / 2018
We analyze the top tail of the wealth distribution in Germany, France, and Spain based on the first and second wave of the Household Finance and Consumption Survey (HFCS). Since top wealth is likely to be underrepresented in household surveys, we integrate big fortunes from rich lists, estimate a Pareto distribution, and impute the missing rich. In addition to the Forbes list, we rely on national rich ...
2018| Stefan Bach, Andreas Thiemann, Aline Zucco
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DIW Discussion Papers 1716 / 2017
In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and-transfer system offsets around half of the inequality ...
2017| Peter Haan, Daniel Kemptner, Victoria Prowse
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DIW Discussion Papers 1715 / 2017
The fixing of the Libor and Euribor benchmark rates has proven vulnerable to manipulation. Individual rate-setters may have incentives to fraudulently distort their submissions. For the contributing banks to collectively agree on the direction in which to rig the rate, however, their interests need to be sufficiently aligned. In this paper we develop cartel theory to show how an interbank lending rates ...
2017| Nuria Boot, Timo Klein, Maarten Pieter Schinkel
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DIW Discussion Papers 1714 / 2017
Low and uncertain carbon prices are often stated as a major obstacle for industrial sector investments in technologies to deliver deep emissions reductions. Project-based carbon contracts underwritten by national governments could addressregulatory risk, lower financing costs and strengthen incentives for emission reductions at investment and operation stage. In this paper design options for project-based ...
2017| Jörn Richstein
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DIW Discussion Papers 1713 / 2017
In advanced economies, state-owned enterprises play an important role in sectors of general interest such as energy and water supply. The conditions under which they operate have changed fundamentally since 1998, with new strategies required for firms to preserve market shares in the face of liberalisation and technological innovation. This paper investigates the productivity effect of three strategies ...
2017| Caroline Stiel
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DIW Discussion Papers 1712 / 2017
Greenhouse gas emission benchmarks are widely implemented as a policy tool, as more countries move to implement carbon pricing mechanisms for industrial emissions. In particular, benchmarks are used to determine the level of free allowance allocation in emission trading schemes, which are distributed as a measure to prevent carbon leakage. This paper analyses how benchmark designs impact firms’ production ...
2017| Vera Zipperer, Misato Sato, Karsten Neuhoff
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DIW Discussion Papers 1711 / 2017
Recent efforts to reduce international tax evasion focus on information exchange with tax havens. Using bilateral bank data for 1,397 country pairs in a balanced quarterly panel from 2003:I – 2017:IV, we first show that information-on-request treaties with tax havens reduce bank deposits in tax havens by 27.5%. Second, also deposits from tax havens in high tax countries decline after such treaties ...
2017| Lukas Menkhoff, Jakob Miethe
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DIW Discussion Papers 1710 / 2017
In this paper we show that carbon pricing is subject to time-inconsistency and we investigate solutions to improve on the problem and restore the incentive for the private sector to invest in low-carbon innovation. We show that a superior price- investment equilibrium can be sustained in the long-term, if the policy-maker is enough forward looking and allowed to build reputation. In the short-term, ...
2017| Olga Chiappinelli, Karsten Neuhoff
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DIW Discussion Papers 1709 / 2017
This paper estimates the causal effects of parental education on their children's risky health behaviours and health status. I study the intergenerational effects of a compulsory schooling reform in Germany after World War II. Implemented across federal states at different points in time, the reform increased the minimum number of school years from eight to nine. Instrumental variable estimates and ...
2017| Mathias Huebener
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DIW Discussion Papers 1708 / 2017
In a laboratory experiment subjects are matched in pairs and interact in an Ultimatum Game. In the Entitlement treatment, the right to be the proposer is allocated to the personin the pair who performed better in a previously conducted math task. Compared to behavior in the control treatment, where the roles are randomly allocated, the proposers increase their strategic demands and offer a smaller ...
2017| Elif E. Demiral, Johanna Mollerstrom