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Diversity and psychological health issues at the workplace are pressing issues in today’s organizations. However, research linking two fields is scant. To bridge this gap, drawing from team faultline research, social categorization theory, and the job-demands resources model, we propose that perceiving one’s team as fragmented into subgroups increases strain. We further argue that this relationship is mediated by task conflict and relationship conflict and that it is moderated by psychological empowerment and task interdependence. Multilevel structural equation models on a two-wave sample consisting of 536 participants from 107 work teams across various industries and work contexts partially supported the hypotheses: task conflict did indeed mediate the positive relationships between perceived subgroups and emotional exhaustion while relationship conflict did not; effects on stress symptoms were absent. Moreover, contrary to our expectations, neither empowerment, nor task interdependence moderated the mediation. Results indicate that team diversity can constitute a job demand that can affect psychological health. Focusing on the mediating role of task conflict, we offer a preliminary process model to guide future research at the crossroads of diversity and psychological health at work.
This paper defends The Transformation of Values into Prices on the Basis of Random Systems, published in EIER, by answering to the Comments made in the same journal by Professors Mori, Morioka and Yamazaki. The clarifications mainly concern the justification of the randomness assumptions, the conditions needed to obtain the equality of total profit with total surplus value in the simplified one-industry system and the invariance of the results to changes in the units of measurement.
Following the financial crash and the subsequent recession, European policymakers have undertaken major reforms regarding the European Economic and Monetary Union (EMU). Yet, the success rate is mixed. Several reform proposals have either completely failed due to opposition forces or are still pending, sometimes for years. This article provides an overview of reforms in four major policy fields: financial stabilisation, economic governance, fiscal solidarity, and cooperative dissolution. Building on the conceptual foundation of policy analysis, it distinguishes between policy outputs and outcomes. Policy output refers to legislation being adopted or agreement on treaty changes, while policy outcomes depict the result from the implementation process.
OTC discount
(2020)
We document a sizable OTC discount in the interdealer market for German sovereign bonds where exchange and over-the-counter trading coexist: the vastmajority of OTC prices are favorable with respect to exchange quotes. This is a challenge for theories of OTC markets centered around search frictions but consistent with models of hybrid markets based on information frictions. We show empiricallythat proxies for both frictions determine variation in the discount, which is largely passed on to customers. Dealers trade on the exchange for immediacy and via brokers for opacity and anonymity, highlighting the complementary roles played by the di↵erent protocols.
This article investigates the roles of psychological biases for deviations between subjective survival beliefs (SSBs) and objective survival probabilities. We model these deviations through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness increase and relative optimism decrease with age. Direct measures of cognitive weakness and optimism share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of SSBs. Our main finding is that cognitive weakness instead of optimism becomes with age an increasingly important contributor to the well-documented overestimation of survival chances in old age.
Using a structural life-cycle model, we quantify the long-term impact of school closures during the Corona crisis on children affected at different ages and coming from households with different parental characteristics. In the model, public investment through schooling is combined with parental time and resource investments in the production of child human capital at different stages in the children's development process. We quantitatively characterize both the long-term earnings consequences on children from a Covid-19 induced loss of schooling, as well as the associated welfare losses. Due to self-productivity in the human capital production function, skill attainment at a younger stage of the life cycle raises skill attainment at later stages, and thus younger children are hurt more by the school closures than older children. We find that parental reactions reduce the negative impact of the school closures, but do not fully offset it. The negative impact of the crisis on children's welfare is especially severe for those with parents with low educational attainment and low assets. The school closures themselves are primarily responsible for the negative impact of the Covid-19 shock on the long-run welfare of the children, with the pandemic-induced income shock to parents playing a secondary role.
External linkages allow nascent ventures to access crucial resources during the process of new product development. Forming external linkages can substantially contribute to a venture’s performance. However, little is known about the paths of external linkage formation, as well as the circumstances that drive the choice to pursue one rather than another path. This gap deserves further investigation, because we do not know whether insights developed for incumbent firms also apply to nascent ventures: To address this gap, we explore a novel dataset of 370 venture creation processes. Using sequence analyses based on optimal matching techniques and cluster analyses, we reveal that nascent ventures pursue one of overall four distinct paths of linkage formation activities during new product development. Contrary to the findings of the strategy literature, we find that if nascent ventures engage in external linkages at all, they do not combine exploration- and exploitation-oriented linkages but form either exploration- or exploitation-oriented linkages. Additional regression analyses highlight the circumstances that lead nascent ventures to pursue one rather than the other pathways. Taken together, our analyses point out that resource scarcity constitutes an important factor shaping the linkage formation activities of nascent ventures. Accordingly, we show that nascent ventures tend not to optimize by adding complementary knowledge to the firm’s knowledge base but rather to extend the existing knowledge base—a strategy which we call bricolage.
Shares of open-end real estate funds are typically traded directly between the investor and the fund management company. However, we provide empirical evidence for the growth of secondary market activities, i.e., the trading of shares on stock exchanges. We find high trading levels in situations where the fund management company suspends the issue or redemption of shares. Shares trade at a discount when the fund management company suspends the redemption, whereas shares trade at a premium when the fund management company suspends the issue. We also find evidence that secondary market trading activity is increasing since German regulation introduced a minimum holding period and a mandatory notice period for open-end real estate funds.
Consuming dividends
(2020)
This paper studies why investors buy dividend-paying assets and how they time their consumption accordingly. We combine administrative bank data linking customers’ consumption transactions and income to detailed portfolio data and survey responses on financial behavior. We find that private consumption is excessively sensitive to dividend income. Investors across wealth, income, and age distributions increase spending precisely around days of dividend receipt. Importantly, the consumption response is driven by financially prudent investors who select dividend portfolios, anticipate dividend income, and plan consumption accordingly. Our results contribute to the literature on a dividend clientele and provide evidence of ‘planned’ excess sensitivity.
This article studies whether people want to control what information on their own past pro-social behavior is revealed to others. Participants are assigned a color that depends on their past pro-social behavior. They can spend money to manipulate the probability with which their color is revealed to another participant. The data show that participants are more likely to reveal colors with more favorable informational content. This pattern is not found in a control treatment in which colors are randomly assigned, thus revealing nothing about past pro-social behavior. Regression analysis confrms these fndings, also when controlling for past pro-social behavior. These results complement the existing empirical evidence, confrming that people strategically and, therefore, consciously manipulate their social image.
The ruling of the German Federal Constitutional Court and its call for conducting and communicating proportionality assessments regarding monetary policy have been the subject of some controversy. However, it can also be understood as a way to strengthen the de-facto independence of the European Central Bank. The authors shows how a regular proportionality check could be integrated in the ECB’s strategy that is currently undergoing a systematic review. In particular, they propose to include quantitative benchmarks for policy rates and the central bank balance sheet. Deviations from such benchmarks can have benefits in terms of the intended path for inflation while involving costs in terms of risks and side effects that need to be balanced. Practical applications to the euro area are provided
We study whether and how time preferences change over the life cycle, exploiting representative long-term panel data. We estimate the age patterns of discount rates from age 25 to 80. In order to identify age effects, we have to disentangle them from cohort and period factors. We address this identification problem by estimating individual fixed effects models, where we substitute period effects with determinants of time preferences that depend on calendar years. We find that discount rates decrease with age and the decline is remarkably linear over the life cycle.
Macro-finance theory predicts that financial fragility builds up when volatility is low. This “volatility paradox’” challenges traditional systemic risk measures. I explore a new dimension of systemic risk, spillover persistence, which is the average time horizon at which a firm’s losses increase future risk in the financial system. Using firm-level data covering more than 30 years and 50 countries, I document that persistence declines when fragility builds up: before crises, during stock market booms, and when banks take more risks. In contrast, persistence increases with loss amplification: during crises and fire sales. These findings support key predictions of recent macrofinance models.
This research examines the impact of online display advertising and paid search advertising relative to offline advertising on firm performance and firm value. Using proprietary data on annualized advertising expenditures for 1651 firms spanning seven years, we document that both display advertising and paid search advertising exhibit positive effects on firm performance (measured by sales) and firm value (measured by Tobin's q). Paid search advertising has a more positive effect on sales than offline advertising, consistent with paid search being closest to the actual purchase decision and having enhanced targeting abilities. Display advertising exhibits a relatively more positive effect on Tobin's q than offline advertising, consistent with its long-term effects. The findings suggest heterogeneous economic benefits across different types of advertising, with direct implications for managers in analyzing advertising effectiveness and external stakeholders in assessing firm performance.
The US Treasury recently permitted deferred longevity income annuities to be included in pension plan menus as a default payout solution, yet little research has investigated whether more people should convert some of the $18 trillion they hold in employer-based defined contribution plans into lifelong income streams. We investigate this innovation using a calibrated lifecycle consumption and portfolio choice model embodying realistic institutional considerations. Our welfare analysis shows that defaulting a modest portion of retirees’ 401(k) assets (over a threshold) is an attractive way to enhance retirement security, enhancing welfare by up to 20% of retiree plan accruals.
Knowledge of consumers' willingness to pay (WTP) is a prerequisite to profitable price-setting. To gauge consumers' WTP, practitioners often rely on a direct single question approach in which consumers are asked to explicitly state their WTP for a product. Despite its popularity among practitioners, this approach has been found to suffer from hypothetical bias. In this paper, we propose a rigorous method that improves the accuracy of the direct single question approach. Specifically, we systematically assess the hypothetical biases associated with the direct single question approach and explore ways to de-bias it. Our results show that by using the de-biasing procedures we propose, we can generate a de-biased direct single question approach that is accurate enough to be useful for managerial decision-making. We validate this approach with two studies in this paper.
Libra — a global virtual currency project initiated by Facebook — has been the subject of many controversial discussions since its announcement in June 2019. This paper provides a differentiated view on Libra, recognising that different development scenarios of Libra are conceivable. Libra could serve purely as an alternative payment system in combination with a dedicated payment token, the Libra coin. Alternatively, the Libra project could develop into a broader financial infrastructure for advanced financial services such as savings and loan products operating on the Libra Blockchain. Based on a comparison of the Libra architecture with other cryptocurrencies, the opportunities and challenges for the development of the respective Libra ecosystems are investigated from a commercial, regulatory and monetary policy perspective.