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DIW Discussion Papers 1407 / 2014
Many commonly used treatment effects estimators rely on the unconfoundedness assumption (“selection on observables") which is fundamentally non-testable. When evaluating the effects of labor market policies, researchers need to observe variables that affect both treatment participation and labor market outcomes. Even though in many countries it is possible to access (very) informative administrative ...
2014| Marco Caliendo, Robert Mahlstedt, Oscar A. Mitnik
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DIW Discussion Papers 1406 / 2014
Biochar is a carbon-rich solid obtained from the heating of biomass in the (near) absence of oxygen in a process called pyrolysis. Its deployment in soils is increasingly discussed as a promising means to sequester carbon in soils and, thus, to help mitigate climate change. For a wide range of feedstocks and scenarios and against the baseline of conventional feedstock management, we calculate the technical ...
2014| Isabel Teichmann
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DIW Discussion Papers 1405 / 2014
We assess the contribution of macroeconomic uncertainty — approximated by the dispersion of the real GDP survey forecasts — to the ex post and ex ante prediction of stock price bubbles. For a panel of six OECD economies covering 24 years, two alternative binary chronologies of bubble periods are determined and subjected to panel logit regressions conditioning on macroeconomic indicators and expectation ...
2014| Helmut Herwartz, Konstantin A. Kholodilin
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DIW Discussion Papers 1404 / 2014
Despite the ongoing appetite of financial investors for merchant investments into the European electricity network, the EC is reluctant to approve such undertakings, thus implicitly favoring regulated investments. Based on a two-level model, we analyze the impact of profit-maximizing merchant transmission investment as compared to welfare-maximizing regulated transmission investment. We apply the model ...
2014| Clemens Gerbaulet, Alexander Weber
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DIW Discussion Papers 1403 / 2014
We provide new evidence on the impact of one severe weather shock on child height in Mongolia. Our focus is on the extremely harsh winter – locally referred to as dzud – of 2009/10, which caused more than 23 percent of the national livestock to perish. This resulted in a food insecurity situation for many Mongolian households. Our analysis identifies causal effects by exploiting exogenous variation ...
2014| Valeria Groppo, Kati Schindler
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DIW Discussion Papers 1402 / 2014
We analyze distinctive investment scenarios for the integration of fluctuating renewables in the German power system. Using a combined model for dispatch, transmission, and investment, three different investment options are considered, including gas-fired power plants, pumped hydro storage, and transmission lines. We find that geographically optimized power plant investments dominate in the reference ...
2014| Jonas Egerer, Wolf-Peter Schill
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DIW Discussion Papers 1401 / 2014
Many economic situations involve the timing of irreversible decisions. E.g. People decide when to sell a stock or stop searching for a better price. We analyze the behavior of a decision maker who evaluates his choice relative to the ex-post optimal choice in an optimal stopping task. We derive the optimal strategy under such regret preferences, and show how it is different from that of an expected ...
2014| Paul Viefers, Philipp Strack
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DIW Discussion Papers 1400 / 2014
The European electricity system is undergoing significant changes, not only with respect to developments in generation and networks but also the arrangements for the operation of the system. These are specified in the Network Codes endorsed by regulators, network operators and the European Commission with the objective to create an \Internal Energy Market". In 2013, European network operators formulated ...
2014| Casimir Lorenz, Clemens Gerbaulet
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DIW Discussion Papers 1399 / 2014
This paper analyses the effects of newspaper coverage of macro news on stock returns in eight countries belonging to the euro area (Belgium, France, Germany, Greece, Ireland, Italy, Portugal and Spain) using daily data for the period 1994-2013. The econometric analysis is based on the estimation of a VAR-GARCH-in-mean model. The results can be summarised as follows. Positive (negative) news have significant ...
2014| Guglielmo Maria Caporale, Fabio Spagnolo, Nicola Spagnolo
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DIW Discussion Papers 1398 / 2014
Concerns about global warming and growing scarcity of fossile fuels require substantial changes in energy consumption patterns and energy systems, as targeted by many countries around the world. One key element to achieve such transformation is to increase energy efficiency of the housing stock. In this context, it is frequently argued that private investments are too low in the light of the potential ...
2014| Konstantin A. Kholodilin, Claus Michelsen
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DIW Discussion Papers 1397 / 2014
Is it possible to combat global climate change through North-to-South technology transfer even without a global climate treaty? Or do carbon leakage and the rebound effect imply that it is possible to take advantage of technological improvements under the umbrella of a global arrangement only? For answering these questions two possible states of the world are discussed: one, where more energy efficient ...
2014| Gunter Stephan, Georg Müller-Fürstenberger
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DIW Discussion Papers 1396 / 2014
We apply a structural model of mothers’ labor supply and child care choices to evaluate the effects of two childcare reforms in Germany that were introduced simultaneously in August 2013. First, a legal claim to subsidized child care became effective for all children aged one year or older. Second, a new benefit called ‘Betreuungsgeld’ came into effect that is granted to families who do not use public ...
2014| Kai-Uwe Müller, Katharina Wrohlich
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DIW Discussion Papers 1395 / 2014
This paper analyses the long-memory properties of both the conditional mean and variance of UK real GDP over the period 1851-2013 by estimating a multivariate ARFIMA-FIGARCH model (with the unemployment rate and inflation as explanatory variables). The results suggest that this series is non-stationary and non-mean-reverting, the null hypotheses of I(0), I(1) and I(2) being rejected in favour of fractional ...
2014| Guglielmo Maria Caporale, Marinko Skare
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DIW Discussion Papers 1394 / 2014
This paper investigates the time-varying impact of oil price uncertainty on stock prices in China using weekly data on ten sectoral indices over the period January 1997-Febraury 2014. The estimation of a bivariate VAR-GARCH-in-mean model suggests that oil price volatility affects stock returns positively during periods characterised by demand-side shocks in all cases except the Consumer Services, Financials, ...
2014| Guglielmo Maria Caporale, Faek Menla Ali, Nicola Spagnolo
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DIW Discussion Papers 1393 / 2014
Expectations form the basis of economic decisions of market participants in an uncertain world. Sentiment indicators reflect those expectations and thus have a proven track record for predicting economic variables. However, respondents of surveys perceive the world to a large extent with the help of media. So far, mainly very crude media information, such as word-count indices, has been used in the ...
2014| Konstantin A. Kholodilin, Tobias Thomas, Dirk Ulbricht
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DIW Discussion Papers 1392 / 2014
Motivated by the lack of literature linking actual to perceived relative deprivation, this paper assesses the role of visibility in the deprivation of goods and assets vis-à-vis income behind perceptions of relative deprivation. We rely on household survey data that includes unique information on reported perceived deprivation with a pre-specified reference group, namely others in the town or village. ...
2014| Veronika Bertram-Hümmer, Ghassan Baliki
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DIW Discussion Papers 1391 / 2014
The World War I played a key role in shaping modern housing policy. While in the pre-War time virtually no housing policy existed, the beginning of hostilities led to an almost immediate and comprehensive state intervention in the housing market, particularly among those engaged in the war. Despite initially similar conditions and challenges induced by the war, housing policy was carried out in different ...
2014| Konstantin A. Kholodilin, Mark G. Meerovich
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DIW Discussion Papers 1390 / 2014
This paper studies the association between a country’s level of financial development and firms’ employment growth. We employ an incomplete contract model for evaluating this association. The model proposes that a high level of financial development affects the employment of firms with low managerial capital negatively, while firms with high managerial capital benefit from a more developed financial ...
2014| Dorothea Schäfer, Susan Steiner
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DIW Discussion Papers 1389 / 2014
To counteract the financial pressure emerging in aging societies, statutory pay‐as‐you‐go pension schemes are undergoing fundamental reforms in many Western countries. Starting with cohort 1937, Germany introduced permanent pension deductions for early retirement. This paper examines the evolution of the profitability of pension contributions against the background of this reform for cohorts 1935‐1945. ...
2014| Holger Lüthen
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DIW Discussion Papers 1388 / 2014
In structural vector autoregressive analysis identifying the shocks of interest via heteroskedasticity has become a standard tool. Unfortunately, the approaches currently used for modelling heteroskedasticity all have drawbacks. For instance, assuming known dates for variance changes is often unrealistic while more exible models based on GARCH or Markov switching residuals are difficult to handle from ...
2014| Helmut Lütkepohl, Aleksei Netsunajev