-
DIW Discussion Papers 1226 / 2012
It is still an open question whether increasing life expectancy as such is causing higher health care expenditures (HCE) in a population. According to the "red herring" hypothesis, the positive correlation between age and HCE is exclusively due to the fact that mortality rises with age and a large share of HCE is caused by proximity to death. As a consequence, rising longevity - through falling mortality ...
2012| Friedrich Breyer, Normann Lorenz, Thomas Niebel
-
DIW Discussion Papers 1225 / 2012
Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of ...
2012| Ansgar Belke, Andreas Freytag, Jonas Keil, Friedrich Schneider
-
DIW Discussion Papers 1224 / 2012
We investigate the persistence of levels of self-employment and new business formation in different time periods and under different framework conditions. The analysis shows that high levels of regional self-employment and new business formation tend to be persistent for periods as long as 80 years and that such an entrepreneurial culture can even survive abrupt and drastic changes in the politic-economic ...
2012| Michael Fritsch, Michael Wyrwich
-
DIW Discussion Papers 1223 / 2012
This study puts the monetary transmission process in the eurozone between 2003 and 2011 under closer scrutiny. For this purpose, we investigate the interest rate pass-through from money market to various loan rates for up to twelve countries of the European Monetary Union. Applying different cointegration techniques, we first test for a long-run relationship between loan rates and the Euro OverNight ...
2012| Ansgar Belke, Joscha Beckmann, Florian Verheyen
-
DIW Discussion Papers 1222 / 2012
In some countries including Germany unemployed workers can increase their income during job search by taking up "marginal employment" up to a threshold without any deduction from their benefits. Marginal employment can be considered as a wage subsidy as it lowers labour costs for firms owing to reduced social security contributions, and increases work incentives due to higher net earnings. Additional ...
2012| Marco Caliendo, Steffen Künn, Arne Uhlendorff
-
DIW Discussion Papers 1221 / 2012
This paper examines the contemporaneous relationship between the exchange rate regime and structural economic reforms for a sample of CEEC/CIS transition countries. We investigate empirically whether structural reforms are complements or substitutes for monetary commitment in the attempt to improve macroeconomic performance. Both EBRD and EFW data suggest a negative relationship between flexible exchange ...
2012| Ansgar Belke, Lukas Vogel
-
DIW Discussion Papers 1220 / 2012
The life-cycle hypothesis implies that consumption would not decline at retirement. However, several studies found relevant declines in food consumption after retirement for the United States. Others concluded that this contradiction of the life-cycle hypothesis is solved by allowing for broader measures of consumption than food. Using repeated cross-section data for Germany, this paper analyzes the ...
2012| Martin Beznoska, Viktor Steiner
-
DIW Discussion Papers 1219 / 2012
The German decision to finally phase-out nuclear electricity has led to a debate on its effects on electricity prices, emission prices in the European emission trading system, as well as on international electricity trade. We investigate these effects with a Electricity market model for Europe with investments in power plants under oligopolistic conditions in Germany. We find modest price increases ...
2012| Thure Traber, Claudia Kemfert
-
DIW Discussion Papers 1218 / 2012
We propose an alternative way of estimating Taylor reaction functions if the zero-lowerbound on nominal interest rates is binding. This approach relies on tackling the real rather than the nominal interest rate. So if the nominal rate is (close to) zero central banks can influence the inflation expectations via quantitative easing. The unobservable inflation expectations are estimated with a state-space ...
2012| Ansgar Belke, Jens Klose
-
DIW Discussion Papers 1217 / 2012
Previous research shows that technical progress at the industry level, measured by sectoral TFP growth, is more localized in continental European countries than in Anglo-Saxon countries. We use EU KLEMS data sets to decompose sectoral TFP for nine European countries by means of a Malmquist approach, in order to separate technical change. Applying Harberger diagrams, we describe the sectoral patterns ...
2012| Alexander Schiersch, Heike Belitz, Martin Gornig
-
DIW Discussion Papers 1216 / 2012
The price for a single-family house depends both on the characteristics of the building and on its location. We propose a novel semiparametric method to extract location values from house prices. After splitting house prices into building and land components, location values are estimated with adaptive weight smoothing. The adaptive estimator requires neither strong smoothness assumptions nor local ...
2012| Jens Kolbe, Rainer Schulz, Martin Wersing, Axel Werwatz
-
DIW Discussion Papers 1215 / 2012
In this study we investigate the impact of the thin capitalization rule (TCR), introduced in Germany in 2008, on firms' capital structure, investment and profitability. The identification of the causal effects is based on the escape clauses in the regulation using a difference-in-difference approach. Our results present evidence that firms strongly react in order to avoid the limited deductibility ...
2012| Hermann Buslei, Martin Simmler
-
DIW Discussion Papers 1214 / 2012
This paper derives a new effect of trade liberalisation on the quality of the environment. We show that in the presence of heterogeneous firms the aggregate volume of emissions is influenced not only by the long-established scale effect, but also by a reallocation effect resulting from an increase in the relative size of more productive firms. We show how the relative importance of these effects, and ...
2012| Udo Kreickemeier, Philipp M. Richter
-
DIW Discussion Papers 1213 / 2012
In this paper I investigate the causal returns to education for different educational groups in Germany by employing a new method by Klein and Vella (2010) that bases identification on the presence of conditional heteroskedasticity. Compared to IV methods, key advantages of this approach are unbiased estimates in the absence of instruments and parameter interpretation that is not bounded to local average ...
2012| Nils Saniter
-
DIW Discussion Papers 1212 / 2012
In this paper, we construct a data set of Internet offer prices for flats in 48 large European cities from 24 countries. The data are collected in January - April 2012 from 33 websites, where the advertisements of flats for sale are placed. Using these data we investigate the determinants of the flat prices. Four factors are found to be relevant for the flats' price level: income per capita, population ...
2012| Konstantin A. Kholodilin
-
DIW Discussion Papers 1211 / 2012
This paper investigates the relationship between wealth, ageing and saving behaviour of private households by using pooled cross sections of German consumption survey data. Different components of wealth are distinguished, as their impact on the savings rate is not homogeneous. On average, the effect attributed to real estate dominates the other components of wealth. In addition, the savings rate strongly ...
2012| Ansgar Belke, Christian Dreger, Richard Ochmann
-
DIW Discussion Papers 1210 / 2012
Dynamic discrete choice models usually require a general specification of unobserved heterogeneity. In this paper, we apply Bayesian procedures as a numerical tool for the estimation of a female labor supply model based on a sample size which is typical for common household panels. We provide two important results for the practitioner: First, for a specification with a multivariate normal distribution ...
2012| Peter Haan, Daniel Kemptner, Arne Uhlendorff
-
DIW Discussion Papers 1209 / 2012
Why do people engage in entrepreneurship and commit large parts of their personal wealth to their business, despite comparably low returns and high risk? This paper connects several streams of literature to shed some light on this puzzle and suggests possible future research avenues. Key insights from the literature are that entrepreneurs may operate in imperfect financial markets and that entrepreneurs ...
2012| Frank M. Fossen
-
DIW Discussion Papers 1208 / 2012
We estimate the causal relationship between family size and labour market outcomes for families in low fertility and low female employment regime. Family size is instrumented using twinning and gender composition of the first two children. Among families with at least one child we identify the average causal effect of an additional child on mother's employment to be -7.1 percentage points. However, ...
2012| Krzysztof Karbownik, Michal Myck
-
DIW Discussion Papers 1207 / 2012
In this paper, we make multi-step forecasts of the monthly growth rates of the prices and rents for flats in 26 largest German cities. Given the small time dimension, the forecasts are done in a panel-data format. In addition, we use panel models that account for spatial dependence between the growth rates of housing prices and rents. Using a quasi out-of-sample forecasting exercise, we find that both ...
2012| Konstantin A. Kholodilin, Andreas Mense