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Following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, FDI inflows relative to GDP for China versus India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the growth rate of the (urban) labor force due to the one-child policy permanently increases the capital per worker inherited from the previous generation. The resulting increase in China's (domestic K)/L thus "crowds out" the need for FDI in China relative to India. Our paper is a contribution to the nascent literature exploring demographic transitions and their effects on FDI flows.
This paper investigates inertia within and across banks in retail deposit markets using detailed panel data on consumer choices and account characteristics. In a structural choice model, I find that costs of inertia are around one third higher for switching accounts across compared to switching within banks. Observable proxies of bank-level switching costs (number and type of additional financial products) explain most of this cost premium, while online banking usage reduces inertia. Consistent with theory, I provide evidence that banks incorporate inertia in their pricing as older accounts pay lower rates than comparable newer accounts. Counterfactual policies reducing inertia shift market share to more competitive smaller banks, but only eliminating inertia within banks already results in high potential gains in consumer surplus. This suggests that facilitating bank switching alone might be insufficient to improve consumer choices.
A growing body of literature shows the importance of financial literacy in households' financial decisions. However, fewer studies focus on understanding the determinants of financial literacy. Our paper fills this gap by analyzing a specific determinant, the educational system, to explain the heterogeneity in financial literacy scores across Germany. We suggest that the lower financial literacy observed in East Germany is partially caused by a different institutional framework experienced during the Cold War, more specifically, by the socialist educational system of the GDR which affected specific cohorts of individuals. By exploiting the unique set-up of the German reunification, we identify education as a channel through which institutions and financial literacy are related in the German context.
Die Verknüpfung des Fahrrades mit dem Öffentlichen Verkehr (ÖV) kann den Umweltverbund stärken, den Übergang von einem Verkehrssystem auf das andere erleichtern und eine attraktive Alternative zum motorisierten Individualverkehr schaffen. Die vorliegende Arbeit repräsentiert den zweiten umfassenden Projektbericht innerhalb des Forschungsprojektes „Verbesserte Integration des Fahrrads in den öffentlichen Verkehr – Systematische Erschließung von Handlungsoptionen und Bewertung von Best-Practices“. Im ersten Projektbericht (ebenfalls in dieser Arbeitspapierreihe erschienen – Nr. 15) wurden die Entwicklungen der letzten Jahre in den infrastrukturellen Themenfeldern Fahrradmitnahme, Fahrradverleihsysteme und Fahrradabstellanlagen aufgearbeitet und Fragen zu Kommunikation und Marketing der Angebote sowie zu Möglichkeiten der fortschreitenden Digitalisierung zur verbesserten Integration von Fahrrad und Öffentlichem Verkehr diskutiert. Darauf aufbauend werden im vorliegenden Bericht die Ergebnisse vertiefender Fallstudien dargestellt, mit dem Ziel, Erfolgsfaktoren und Hemmnisse für die Integration von Fahrrad mit Öffentlichem Verkehr aufzuzeigen und in einem späteren Schritt daraus Handlungsempfehlungen zur Stärkung dieser Integration für Kommunen und Verkehrsanbieter geben zu können. Für die Fallstudien wurden solche Beispiele ausgewählt, die einen Vorbildcharakter haben und als nachahmenswert für andere Städte und Regionen gelten können bzw. aus denen sich Erkenntnisse für die Stärkung der Integration von Fahrradverkehr mit dem ÖV ziehen lassen. Zudem sollten die verschiedenen infrastrukturellen Themenfelder abgedeckt sein. Neben einer Darstellung der jeweils fallspezifischen Besonderheiten wird zu jedem Fallbeispiel das Betreiber- und Geschäftsmodell dargestellt und es erfolgt eine Bewertung, die sowohl die Sicht der Betreiber als auch die der Nutzenden beachtet.
Folgende Fallbeispiele werden behandelt:
Die hessischen Verkehrsverbünde Rhein-Main-Verkehrsverbund (RMV) und Nordhessischer Verkehrsverbund (NVV) bieten eine kosten- und sperrzeitfreie Mitnahmeregelung für Fahrräder an.
Das MVGmeinRad Mainz ist als Fahrradverleihsystem ein Teil des kommunalen ÖPNV-Unternehmens.
Zu den Fahrradabstellanlagen an Bahnhöfen wurden in der Fallstudie drei unterschiedlich große Anlagen einbezogen: Dein Radschloss des Verkehrsverbundes Rhein-Ruhr (VRR) für kleine, das Radhaus Offenburg für mittelgroße und die Radstation Düsseldorf für große Standorte.
München wurde schließlich für eine kommunale Strategie zur verbesserten Verknüpfung von Fahrrad und Öffentlichem Verkehr ausgewählt, da dort eine Vielzahl von Maßnahmen zur Stärkung der Fahrradmobilität sichtbar sind.
This paper argues that the introduction of the Banking Recovery and Resolution Directive (BRRD) improved market discipline in the European bank market for unsecured debt. The different impact of the BRRD on bank bonds provides a quasi-natural experiment that allows to study the effect of the BRRD within banks using a difference-in-difference approach. Identification is based on the fact that (otherwise identical) bonds of a given bank maturing before 2016 are explicitly protected from BRRD bail-in. The empirical results are consistent with the hypothesis that debt holders actively monitor banks and that the BRRD diminished bail-out expectations. Bank bonds subject to BRRD bail-in carry a 10 basis points bail-in premium in terms of the yield spread. While there is some evidence that the bail-in premium is more pronounced for non-GSIB banks and banks domiciled in peripheral European countries, weak capitalization is the main driver.
Ideally located in the writer's position of the voice "contractus (& quasi contractus)" of the Dictionary, the author of this paper tries to discover the difficulties that his drafting could imply. The difficulties encountered come mainly from the chronology and the diversity of profiles between the members of the Salamanca School that deal with contracts, from the unusual historical and material extension of the elements they work with and from the need to understand their methods, their initial assumptions and the aims they pursue. At the end, some practical considerations are offered to the voice's drafting.
We develop a model that reproduces the average return and volatility spread between sin and non-sin stocks. Our investors do not necessarily boycott sin companies. Rather, they are open to invest in any company while trading off dividends against ethicalness. We show that when dividends and ethicalness are complementary goods and investors are sufficiently risk averse, the model predicts that the dividend share of sin companies exhibits a positive relation with the future return and volatility spreads. Our empirical analysis supports the model's predictions.
Coordination of circuit breakers? Volume migration and volatility spillover in fragmented markets
(2018)
We study circuit breakers in a fragmented, multi-market environment and investigate whether a coordination of circuit breakers is necessary to ensure their effectiveness. In doing so, we analyze 2,337 volatility interruptions on Deutsche Boerse and research whether a volume migration and an accompanying volatility spillover to alternative venues that continue trading can be observed. Different to prevailing theoretical rationale, trading volume on alternative venues significantly decreases during circuit breakers on the main market and we do not find any evidence for volatility spillover. Moreover, we show that the market share of the main market increases sharply during a circuit breaker. Surprisingly, this is amplified with increasing levels of fragmentation. We identify high-frequency trading as a major reason for the vanishing trading activity on the alternative venues and give empirical evidence that a coordination of circuit breakers is not essential for their effectiveness as long as market participants shift to the dominant venue during market stress.
We study the introduction of single-market liquidity provider incentives in fragmented securities markets. Specifically, we investigate whether fee rebates for liquidity providers enhance liquidity on the introducing market and thereby increase its competitiveness and market share. Further, we analyze whether single-market liquidity provider incentives increase overall market liquidity available for market participants. Therefore, we measure the specific liquidity contribution of individual markets to the aggregate liquidity in the fragmented market environment. While liquidity and market share of the venue introducing incentives increase, we find no significant effect for turnover and liquidity of the whole market.
We investigate different designs of circuit breakers implemented on European trading venues and examine their effectiveness to manage excess volatility and to preserve liquidity. Specifically, we empirically analyze volatility and liquidity around volatility interruptions implemented on the German and Spanish stock market which differ regarding specific design parameters. We find that volatility interruptions in general significantly decrease volatility in the post interruption phase. Unfortunately, this decrease in volatility comes at the cost of decreased liquidity. Regarding design parameters, we find tighter price ranges and shorter durations to support volatility interruptions in achieving their goals.
The paper analyses the contagion channels of the European financial system through the stochastic block model (SBM). The model groups homogeneous connectivity patterns among the financial institutions and describes the shock transmission mechanisms of the financial networks in a compact way. We analyse the global financial crisis and European sovereign debt crisis and show that the network exhibits a strong community structure with two main blocks acting as shock spreader and receiver, respectively. Moreover, we provide evidence of the prominent role played by insurances in the spread of systemic risk in both crises. Finally, we demonstrate that policy interventions focused on institutions with inter-community linkages (community bridges) are more effective than the ones based on the classical connectedness measures and represents consequently, a better early warning indicator in predicting future financial losses.
We propose a unified framework to measure the effects of different reforms of the pension system on retirement ages and macroeconomic indicators in the face of demographic change. A rich overlapping generations (OLG) model is built and endogenous retirement decisions are explicitly modeled within a public pension system. Heterogeneity with respect to consumption preferences, wage profiles, and survival rates is embedded in the model. Besides the expected direct effects of these reforms on the behavior of households, we observe that feedback effects do occur. Results suggest that individual retirement decisions are strongly influenced by numerous incentives produced by the pension system and macroeconomic variables, such as the statutory eligibility age, adjustment rates, the presence of a replacement rate, and interest rates. Those decisions, in turn, have several impacts on the macro-economy which can create feedback cycles working through equilibrium effects on interest rates and wages. Taken together, these reform scenarios have strong implications for the sustainability of pension systems. Because of the rich nature of our unified model framework, we are able to rank the reform proposals according to several individual and macroeconomic measures, thereby providing important support for policy recommendations on pension systems.
The increase in alternative working arrangements has sparked a debate over the positive impact of increased flexibility against the negative impact of decreased financial security. We study the prevalence and determinants of intermediated work in order to document the relative importance of the arguments for and against this recent labor market trend. We link data on individual participation and losses from a Federal Trade Commission settlement with a Multi-Level Marketing firm with detailed county-level information. Participation is greater in middle-income areas and in areas where female labor market non-participation is higher, suggesting that flexibility offers real benefits. However, losses from MLM participation are higher in areas with lower education levels and higher income inequality, suggesting that the downsides of alternative work are particularly high in certain demographics. Our results illustrate that the advantages and disadvantages of alternative work arrangements accrue to different groups.
With a notional amount outstanding of more than USD 500 trillion, the market for OTC derivatives is of vital importance for global financial stability. A growing proportion of these contracts are cleared via central counterparties (CCPs), which means that CCPs are gaining in importance as critical financial market infrastructures. At the same time, there is growing concern that a new "too big to fail" problem could arise, as the CCP industry is highly concentrated due to economies of scale. From a European perspective, it should be noted that the clearing of euro-denominated OTC derivatives mainly takes place in London, hence outside the EU in the foreseeable future. For some time there has been a controversial discussion as to whether this can remain the case post Brexit.
CCPs, which clear a significant proportion of euro OTC derivatives and are systemically relevant from an EU perspective, should be subject to direct supervision by EU authorities and should be established in the EU. This would represent an important building block for a future Capital Markets Union in Europe, as regulatory or supervisory arbitrage in favour of systemically important third- ountry CCPs could be prevented. In addition, if a systemically relevant CCP handling a considerable portion of the euro OTC derivatives business were to run into serious difficulties, this may impact ECB monetary policy. This applies both to demand for central bank money and to the transmission of monetary policy measures, which can be significantly impaired, particularly in the event that the repo market or payment systems are disrupted. It is therefore essential for the ECB to be closely involved in the supervision of CCPs. Against this background, the draft amendment of EMIR (European Market Infrastructure Regulation) presented on 13 June 2017 is a step in the right direction. In addition, there is an urgent need to introduce a recovery and resolution mechanism for CCPs in the EU to complement the existing single resolution mechanism (SRM) for banks in the eurozone. Only then can the diverse interdependencies between banks and CCPs be adequately taken into account in the recovery and resolution programmes required in a financial crisis.
The German government has recently adopted a reform package for the statutory pension insurance scheme to ensure that the pension level will not fall below 48% and that the contribution rate will not exceed 20% up to 2025. In addition, there are planned improvements in maternal pensions, pensions for people with reduced earnings capacity and relief for low-income earners. The total extra cost of these measures is estimated at approximately EUR 32bn, to be financed by funds of the statutory pension system and by increased federal subsidies. It is currently unclear how the German pay-as-you-go pension system will be reformed for the period after 2025. The author suggests establishing a “Pension Fund Germany” as a capital-backed fund with a highly diversified investment portfolio. A German sovereign wealth fund of this kind could make an important contribution to greater intergenerational equity. Financing could be provided by, for example, retaining part of the solidarity surcharge on German income tax rather than abolishing it entirely, as is currently envisaged.
Die Förderung von Fahrradmobilität und öffentlichem Verkehr ist ein wesentlicher Baustein zur Gestaltung einer ökologisch nachhaltigeren, sozial verträglicheren und ökonomisch tragfähigen Verkehrs- und Siedlungsentwicklung in Deutschland. Mit einer verbesserten intermodalen Verknüpfung werden beide Verkehrsträger attraktiver und somit häufiger genutzt. Öffentliche Verkehrsunternehmen gewinnen dadurch vergrößerte Einzugsbereiche von Haltestellen, können Spitzenbelastungen abfedern und verbessern ihr Image. Fahrradfahrenden ermöglicht die Kombination mit öffentlichen Verkehrsmitteln größere Reichweiten, was gerade auch in randstädtischen, suburbanen oder ländlichen Regionen bedeutsam werden kann. Letztlich leistet die Verknüpfung der beiden Verkehrsträger einen Beitrag zur Daseinsvorsorge und für den Klimaschutz.
Der Handlungsleitfaden wurde innerhalb des Forschungsprojektes „Verbesserte Integration des Fahrrads in den öffentlichen Verkehr – Systematische Erschließung von Handlungsoptionen und Bewertung von Best-Practices“ erarbeitet. Das Projekt wurde vom Bundesministerium für Verkehr und digitale Infrastruktur (BMVI) aus Mitteln zur Umsetzung des Nationalen Radverkehrsplans gefördert.
We propose a spatiotemporal approach for modeling risk spillovers using time-varying proximity matrices based on observable financial networks and introduce a new bilateral specification. We study covariance stationarity and identification of the model, and analyze consistency and asymptotic normality of the quasi-maximum-likelihood estimator. We show how to isolate risk channels and we discuss how to compute target exposure able to reduce system variance. An empirical analysis on Euro-area cross-country holdings shows that Italy and Ireland are key players in spreading risk, France and Portugal are the major risk receivers, and we uncover Spain's non-trivial role as risk middleman.
A tale of one exchange and two order books : effects of fragmentation in the absence of competition
(2018)
Exchanges nowadays routinely operate multiple, almost identically structured limit order markets for the same security. We study the effects of such fragmentation on market performance using a dynamic model where agents trade strategically across two identically-organized limit order books. We show that fragmented markets, in equilibrium, offer higher welfare to intermediaries at the expense of investors with intrinsic trading motives, and lower liquidity than consolidated markets. Consistent with our theory, we document improvements in liquidity and lower profits for liquidity providers when Euronext, in 2009, consolidated its order ow for stocks traded across two country-specific and identically-organized order books into a single order book. Our results suggest that competition in market design, not fragmentation, drives previously documented improvements in market quality when new trading venues emerge; in the absence of such competition, market fragmentation is harmful.
Der Band untersucht die Ursachen, Ausprägungen und Reaktionen auf die Entstehung bzw. Erstarkung populistischer Parteien und Bewegungen in Deutschland und Ostmitteleuropa.
Inhaltsverzeichnis:
Arthur Benz: Populismus als Herausforderung für Wissenschaft und Praxis - Einleitung
Dirk Jörke: Populismus – Ursachen und falsche Antworten
Michael Edinger: Mobilisierung gegen das Establishment. Zu einem Wesensmerkmal populistischer Strömungen
Claudia Landwehr und Nils D. Steiner: Populismus – eine Nachfrageperspektive
Joachim Klose: Ein Land, zwei Perspektiven? Zum Populismusin Ost- und Westdeutschland
Petra Guasti und Lenka Buštíková: Populismus in Ostmitteleuropa und der Verzicht auf Politik
This paper analyses whether the post-crisis regulatory reforms developed by global-standard-setting bodies have created appropriate incentives for different types of market participants to centrally clear Over-The-Counter (OTC) derivative contracts. Beyond documenting the observed facts, we analyze four main drivers for the decision to clear: 1) the liquidity and riskiness of the reference entity; 2) the credit risk of the counterparty; 3) the clearing member’s portfolio net exposure with the Central Counterparty Clearing House (CCP) and 4) post trade transparency. We use confidential European trade repository data on single-name Sovereign Credit Derivative Swap (CDS) transactions, and show that for all the transactions reported in 2016 on Italian, German and French Sovereign CDS 48% were centrally cleared, 42% were not cleared despite being eligible for central clearing, while 9% of the contracts were not clearable because they did not satisfy certain CCP clearing criteria. However, there is a large difference between CCP clearing members that clear about 53% of their transactions and non-clearing members, even those that are subject to counterparty risk capital requirements, that almost never clear their trades. Moreover, we find that diverse factors explain clearing members’ decision to clear different CDS contracts: for Italian CDS, counterparty credit risk exposures matter most for the decision to clear, while for French and German CDS, margin costs are the most important factor for the decision. Clearing members use clearing to reduce their exposures to the CCP and largely clear contracts when at least one of the traders has a high counterparty credit risk.
We examine how a firms' investment behavior affects the investment of a neighboring firm. Economic theory yields ambiguous predictions regarding the direction of firm peer effects and consistent with earlier work, we find that firms display similar investment behavior within an area using OLS analysis. Exploiting time-variation in the rise of U.S. states' corporate income taxes and utilizing heterogeneity in firms' exposure to increases in corporate income tax rates, we identify the causal impact of local firms' investments. Using this as an instrumental variable in a 2SLS estimation, we find that an increases in local firms' investment reduces the investment of a local peer firm. This effect is more pronounced if local competition among firms is stronger and supports theories that firm investments are strategic substitutes due to competition.
We investigate the characteristics of infrastructure as an asset class from an investment perspective of a limited partner. While non U.S. institutional investors gain exposure to infrastructure assets through a mix of direct investments and private fund vehicles, U.S. investors predominantly invest in infrastructure through private funds. We find that the stream of cash flows delivered by private infrastructure funds to institutional investors is very similar to that delivered by other types of private equity, as reflected by the frequency and amounts of net cash flows. U.S. public pension funds perform worse than other institutional investors in their infrastructure fund investments, although they are exposed to underlying deals with very similar project stage, concession terms, ownership structure, industry, and geographical location. By selecting funds that invest in projects with poor financial performance, U.S. public pension funds have created an implicit subsidy to infrastructure as an asset class, which we estimate within the range of $730 million to $3.16 billion per year depending on the benchmark.
In the secondary art market, artists play no active role. This allows us to isolate cultural influences on the demand for female artists’ work from supply-side factors. Using 1.5 million auction transactions in 45 countries, we document a 47.6% gender discount in auction prices for paintings. The discount is higher in countries with greater gender inequality. In experiments, participants are unable to guess the gender of an artist simply by looking at a painting and they vary in their preferences for paintings associated with female artists. Women's art appears to sell for less because it is made by women.
We analytically characterize optimal monetary policy for an augmented New Keynesian model with a housing sector. In a setting where the private sector has rational expectations about future housing prices and inflation, optimal monetary policy can be characterized without making reference to housing price developments: commitment to a 'target criterion' that refers to inflation and the output gap only is optimal, as in the standard model without a housing sector. When the policymaker is concerned with potential departures of private sector expectations from rational ones and seeks to choose a policy that is robust against such possible departures, then the optimal target criterion must also depend on housing prices. In the empirically realistic case where housing is subsidized and where monopoly power causes output to fall short of its optimal level, the robustly optimal target criterion requires the central bank to 'lean against' housing prices: following unexpected housing price increases, policy should adopt a stance that is projected to undershoot its normal targets for inflation and the output gap, and similarly aim to overshoot those targets in the case of unexpected declines in housing prices. The robustly optimal target criterion does not require that policy distinguish between 'fundamental' and 'non-fundamental' movements in housing prices.
Motivated by the observation that survey expectations of stock returns are inconsistent with rational return expectations under real-world probabilities, we investigate whether alternative expectations hypotheses entertained in the asset pricing literature are consistent with the survey evidence. We empirically test (1) the notion that survey forecasts constitute rational but risk-neutral forecasts of future returns, and (2) the notion that survey fore- casts are ambiguity averse/robust forecasts of future returns. We find that these alternative hypotheses are also strongly rejected by the data, albeit for different reasons. Hypothesis (1) is rejected because survey return forecasts are not in line with risk-free interest rates and because survey expected excess returns are predictable. Hypothesis (2) is rejected because agents are not al- ways pessimistic about future returns, instead often display overly optimistic return expectations. We speculate as to what kind of expectations theories might be consistent with the available survey evidence.
Im Mittelpunkt Deutsch
(2018)
In these volumes, we are very pleased to present a collection of papers based on talks and posters at Sinn und Bedeutung 22, which took place in Berlin and Potsdam on September 7-10, 2017, jointly organized by the Leibniz-Centre for General Linguistics (ZAS) and the University of Potsdam.
SuB22 received 183 submitted abstracts. Out of these, the organizing committee selected 39 oral presentations in the main session, 4 oral presentations in the special session ‘Semantics and Natural Logic’, and 24 poster presentations. There were an additional 6 invited talks. In total, 58 of these contributions appear in paper form in the present volumes.
In these volumes, we are very pleased to present a collection of papers based on talks and posters at Sinn und Bedeutung 22, which took place in Berlin and Potsdam on September 7-10, 2017, jointly organized by the Leibniz-Centre for General Linguistics (ZAS) and the University of Potsdam.
SuB22 received 183 submitted abstracts. Out of these, the organizing committee selected 39 oral presentations in the main session, 4 oral presentations in the special session ‘Semantics and Natural Logic’, and 24 poster presentations. There were an additional 6 invited talks. In total, 58 of these contributions appear in paper form in the present volumes.
Whither artificial intelligence? Debating the policy challenges of the upcoming transformation
(2018)
Frankfurt ist Knotenpunkt globaler Güter-, Finanz-, Wissens- und Migrationsbewegungen. Die Arbeitsmärkte und -verhältnisse in der Stadt sind Ausdruck einer globalen Verwobenheit, die diskursiv oft mit dem Label der ›Global City‹ markiert wird. In einer Zeit, in der Arbeit als Feld der Produktion und Reproduktion weitreichenden Transformationsprozessen ausgesetzt ist, in der das sogenannte Normalarbeitsverhältnis zunehmend erodiert, in der Arbeitsverhältnisse oft räumlich, sozial und zeitlich entgrenzt und flexibilisiert sind und in der gut bezahlte Jobs und schlecht- bezahlte, teils prekarisierte Formen der Beschäftigung koexistieren – zum Teil im gleichen Betrieb –, muss es Aufgabe wirtschaftsgeographischer Forschung sein, die Lebenswelten von Arbeitenden in einer räumlichen Perspektive zu beleuchten. Genau dies will der vorliegende Band tun. Er versammelt engagierte, theoretisch gesättigte und empirisch geerdete Beiträge von Studierenden des Instituts für Humangeographie, die einen kritischen Blick auf die Formen, Praktiken, Beziehungen und gesellschaftliche Einbettung von Arbeit in unterschiedlichen Branchen in der ›Global City‹ Frankfurt werfen.