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This paper shows that support for climate action is high across survey participants from all EU countries in three dimensions: (1) Participants are willing to contribute personally to combating climate change, (2) they approve of pro-climate social norms, and (3) they demand government action. In addition, there is a significant perception gap where individuals underestimate others' willingness to contribute to climate action by over 10 percentage points, influencing their own willingness to act. Policymakers should recognize the broad support for climate action among European citizens and communicate this effectively to counteract the vocal minority opposed to it.
Inflation and trading
(2024)
We study how investors respond to inflation combining a customized survey experiment with trading data at a time of historically high inflation. Investors' beliefs about the stock return-inflation relation are very heterogeneous in the cross section and on average too optimistic. Moreover, many investors appear unaware of inflation-hedging strategies despite being otherwise well-informed about inflation and asset returns. Consequently, whereas exogenous shifts in inflation expectations do not impact return expectations, information on past returns during periods of high inflation leads to negative updating about the perceived stock-return impact of inflation, which feeds into return expectations and subsequent actual trading behavior.
We educate investors with significant dividend holdings about the benefits of dividend reinvestment and the costs of misperceiving dividends as additional, free income. The intervention increases planned dividend reinvestment in survey responses. Using trading records, we observe a corresponding causal increase in dividend reinvestment in the field of roughly 50 cents for every euro received. This holds relative to their prior behavior and a placebo sample. Investors who learned the most from the intervention update their trading by the largest extent. The results suggest the free dividends fallacy is a significant source of dividend demand. Our study demonstrates that simple, targeted, and focused educational interventions can affect investment behavior.
How does the design of debt repayment schedules affect household borrowing? To answer this question, we exploit a Swedish policy reform that eliminated interest-only mortgages for loan-to-value ratios above 50%. We document substantial bunching at the threshold, leading to 5% lower borrowing. Wealthy borrowers drive the results, challenging credit constraints as the primary explanation. We develop a model to evaluate the mechanisms driving household behavior and find that much of the effect comes from households experiencing ongoing flow disutility to amortization payments. Our results indicate that mortgage contracts with low initial payments substantially increase household borrowing and lifetime interest costs.
This paper contributes a multivariate forecasting comparison between structural models and Machine-Learning-based tools. Specifically, a fully connected feed forward non-linear autoregressive neural network (ANN) is contrasted to a well established dynamic stochastic general equilibrium (DSGE) model, a Bayesian vector autoregression (BVAR) using optimized priors as well as Greenbook and SPF forecasts. Model estimation and forecasting is based on an expanding window scheme using quarterly U.S. real-time data (1964Q2:2020Q3) for 8 macroeconomic time series (GDP, inflation, federal funds rate, spread, consumption, investment, wage, hours worked), allowing for up to 8 quarter ahead forecasts. The results show that the BVAR improves forecasts compared to the DSGE model, however there is evidence for an overall improvement of predictions when relying on ANN, or including them in a weighted average. Especially, ANN-based inflation forecasts improve other predictions by up to 50%. These results indicate that nonlinear data-driven ANNs are a useful method when it comes to macroeconomic forecasting.
Central bank intervention in the form of quantitative easing (QE) during times of low interest rates is a controversial topic. The author introduces a novel approach to study the effectiveness of such unconventional measures. Using U.S. data on six key financial and macroeconomic variables between 1990 and 2015, the economy is estimated by artificial neural networks. Historical counterfactual analyses show that real effects are less pronounced than yield effects.
Disentangling the effects of the individual asset purchase programs, impulse response functions provide evidence for QE being less effective the more the crisis is overcome. The peak effects of all QE interventions during the Financial Crisis only amounts to 1.3 pp for GDP growth and 0.6 pp for inflation respectively. Hence, the time as well as the volume of the interventions should be deliberated.
The development of China’s exports – is there a decoupling from the EU and the United States?
(2024)
Some observers warn that a high level of economic dependence on China could negatively affect the economic resilience of Western economies and therefore recommend reducing such dependence by gradually decoupling from China. On the other hand, industry leaders emphasise the economic importance of China and warn against any kind of trade conflicts.
Against this background, we briefly analyse the development of China’s export strategy. We find that the export intensity of the Chinese economy is diminishing and that exports are becoming more diversified overall. In addition, the relative importance of the United States and the European Union as export markets has been reduced, indicating a gradual decoupling of China from Western economies. Conversely, we find that exports to China have become more important, both for the EU and the United States. Although the figures remain at a non-critical level, Europe’s export activities could be more diversified as well.
Das Ziel der BMBF-finanzierten Forschungsprojekte „Nachhaltige Mobilität in Lincoln 1“ und „Nachhaltige Mobilität in Lincoln 2“ ist es, Erkenntnisse zu Veränderungen im Mobilitätsverhalten von Personen zu erlangen, die in ein autoreduziertes Quartier umziehen. Dazu wurden zwei aufeinander aufbauende Vollbefragungen der erwachsenen Bewohner*innen der autoreduzierten Lincoln-Siedlung in Darmstadt durchgeführt. Im Rahmen der ersten Befragung im Jahr 2020 wurden 1.140, im Rahmen der zweiten Befragungswelle, 2021, 1.614 Fragebögen verteilt. Der Rücklauf belief sich 2020 auf n = 166 (14,6 %), in 2021 auf n = 231 (14,3 %). Der vorliegende Bericht beschreibt das methodische Vorgehen im Rahmen der Befragungen. Hierfür wird auf das besondere Panel-Design der Studie eingegangen. Dieses ermöglicht sowohl Einblicke in den Umzug in die Siedlung, als auch in das Leben in der Siedlung im Verlauf eines Jahres, und die damit einhergehenden Veränderungen im individuelle Mobilitätsverhalten. Der Bericht stellt dazu die zentralen Inhalte des Fragebogens vor und erläutert die Durchführung der Befragungen. In deren Rahmen wurden die Bewohner*innen der Lincoln-Siedlung insgesamt dreimal kontaktiert. Um die Bereitschaft zur Teilnahme zu steigern, wurden im Vorfeld der Erhebungen mittels einer Pressemitteilung auf die Befragung aufmerksam gemacht und Ankündigungsschreiben in die Briefkästen der Bewohner*innen verteilt. Eine Woche nach der eigentlichen Fragebogenverteilung wurden Erinnerungsschreiben verteilt. Ferner geht der Methodenbericht auf den Umgang mit dem Rücklauf sowie auf die Datenaufbereitung und - eingabe ein, bevor die soziodemographischen Daten der Teilnehmer*innen auf ihre Repräsentativität geprüft werden.
Experiments are an important tool in economic research. However, it is unclear to which extent the control of experiments extends to the perceptions subjects form of such experimental decision situations. This paper is the first to explicitly elicit perceptions of the dictator and trust game and shows that there is substantial heterogeneity in how subjects perceive the same game. Moreover, game perceptions depend not only on the game itself but also on the order of games (i.e., the broader experimental context in which the game is embedded) and the subject herself. This highlights that the control of experiments does not necessarily extend to game perceptions. The paper also demonstrates that perceptions are correlated with game behavior and moderate the relationship between game behavior and field behavior, thereby underscoring the importance and relevance of game perceptions for economic research.
This article provides an overview and critical assessment of WIPO ALERT. It locates this initiative in the broader context of transnational IP enforcement schemes on the Internet. These initiatives are classified into two categories according to their point of attachment and geographical effect. Whereas source-related measures (e.g. website takedowns) tend to have a transnational and possibly even a global effect, recipient-related measures (e.g. website and ad blockings) typically mirror the territorially fragmented IPR landscape. This fragmentation is where WIPO ALERT comes into play. It can be understood as a matching service which interconnects holders of information about copyright infringing websites (“Authorized Contributors”) and actors of the online ad industry who want to avoid these outlets (“Authorized Users”). The critical assessment of WIPO ALERT calls for more transparency and the establishment of uniform substantive and procedural standards that have to be met if a new “site of concern” is added to the global ad blacklist.
Speculative news on corporate takeovers may hurt productivity because uncertainty and threat of job loss cause anxiety, distraction, and reduced collaboration and morale among employees and managers. Using a panel of OECD-headquartered firms, we show that firm productivity temporarily declines upon announcements of speculative takeover rumors that do not materialize. This productivity dip is more pronounced for targets and for firms in countries with weaker employee rights and less long-term orientation. Abnormal stock returns mirror these results. The evidence fosters our understanding of potential real effects of speculative financial news and the costs of takeover threats.
This paper examines the performance of 538 sovereign wealth fund (SWF) investments into venture capital, private equity, and real asset funds (“alternative asset funds”) from 52 countries around the world over the years 1995-2020. The data indicate SWFs are significantly slower to fully liquidate and earn lower returns from their investments, particularly from their investments in venture capital funds. The longer duration and lower performance of SWFs is more pronounced for strategic SWFs than savings SWFs. We show that venture capital fund investments are more likely to be in countries with lower quality disclosure indices. SWFs are more often in buyout funds, and in larger funds with a greater number of limited partners. SWF performance is enhanced by having different types of institutional investors in the same limited partnership. Overall, the data indicate sovereign wealth funds make large investments in alternative asset funds with a longer-term view and earn a lower financial return consistent with strategic and political SWF investment motives.
This paper examines the causes and consequences of hedge fund investments in exchange traded funds (ETFs) using U.S. data from 1998 to 2018. The data indicate that transient hedge funds and quasi-indexer hedge funds are substantially more likely to invest in ETFs. Unexpected hedge fund inflows cause a rise in ETF investments, and the economic significance of unexpected flow is more than twice as large for transient than quasi-indexer hedge funds. ETF investment is in general associated with lower hedge fund performance. But when ETF investment is accompanied by an increase in total flow and unexpected flow, the negative impact of ETF holdings on performance is mitigated. The data are consistent with the view that hedge fund ETF investment unrelated to unexpected flow is an agency cost of delegated portfolio management.
Highly interconnected global supply chains make countries vulnerable to supply chain disruptions. The authors estimate the macroeconomic effects of global supply chain shocks for the euro area. Their empirical model combines business cycle variables with data from international container trade.
Using a novel identification scheme, they augment conventional sign restrictions on the impulse responses by narrative information about three episodes: the Tohoku earthquake in 2011, the Suez Canal obstruction in 2021, and the Shanghai backlog in 2022. They show that a global supply chain shock causes a drop in euro area real economic activity and a strong increase in consumer prices. Over a horizon of one year, the global supply chain shock explains about 30% of inflation dynamics. They also use regional data on supply chain pressure to isolate shocks originating in China.
Their results show that supply chain disruptions originating in China are an important driver for unexpected movements in industrial production, while disruptions originating outside China are an especially important driver for the dynamics of consumer prices.
A novel spatial autoregressive model for panel data is introduced, which incor-porates multilayer networks and accounts for time-varying relationships. Moreover, the proposed approach allows the structural variance to evolve smoothly over time and enables the analysis of shock propagation in terms of time-varying spillover effects.
The framework is applied to analyse the dynamics of international relationships among the G7 economies and their impact on stock market returns and volatilities. The findings underscore the substantial impact of cooperative interactions and highlight discernible disparities in network exposure across G7 nations, along with nuanced patterns in direct and indirect spillover effects.
In his speech at the conference „The SNB and its Watchers“, Otmar Issing, member of the ECB Governing Council from its start in 1998 until 2006, takes a look back at more than twenty years of the conference series „The ECB and Its Watchers“. In June 1999, Issing established this format together with Axel Weber, then Director of the Center for Financial Studies, to discuss the monetary policy strategy of the newly founded central bank with a broad circle of participants, that is academics, bank economists and members of the media on a „neutral ground“. At the annual conference, the ECB and its representatives would play an active role and engage in a lively exchange of view with the other participants. Over the years, Volker Wieland took over as organizer of the conference series, which also was adopted by other central banks. In his contribution at the second conference „The SNB and its Watchers“, Issing summarizes the experience gained from over twenty years of the ECB Watchers Conference.
Der Beitrag führt in das sozialpsychologische Phänomen des Gruppendenkens ein. Kennzeichen und Gegenstrategien werden anhand von Zeugenaussagen vor dem Wirecard-Untersuchungsausschuss am Beispiel des Aufsichtsrats illustriert. Normative Implikationen de lege ferenda schließen sich an. Sie betreffen unabhängige Mitglieder (auch auf der Arbeitnehmerbank), Direktinformationsrechte im Unternehmen (unter Einschluss von Hinweisgebern) und den Investorendialog (auch mit Leerverkäufern).
Methodenbericht zur Haushaltsbefragung "Mobilität im Quartier" in Frankfurt am Main und Darmstadt
(2023)
Mit dem Ziel, die Zustimmung der Bevölkerung zu verschiedenen verkehrspolitischen Maßnahmen im Bereich des Parkraummanagements zu ermitteln, wurde im März 2022 eine quantitative Haushaltsbefragung (N=1.186) in acht Quartieren in Darmstadt und Frankfurt am Main durchgeführt. Insgesamt wurden je Quartier 600 Fragebögen verteilt und ein Rücklauf von 25% erzielt. Die Stichprobenauswahl erfolgte dabei mithilfe des Random-Route-Verfahrens und der Last-Birthday-Methode. Die Befragung „Mobilität im Quartier“ wurde im Rahmen des BMBF-geförderten Projektes QuartierMobil 2: Persistenz und Dynamik urbaner Mobilität – Strategien zur Zukunft des städtischen Parkens sowie alternativer Mobilitätsangebote durchgeführt und knüpft an Erkenntnissen aus der ersten Projektphase (QuartierMobil, 2017-2020) an. Im Methodenbericht werden zunächst der Projektkontext und die thematischen Schwerpunkte des Fragebogens vorgestellt. Anschließend werden die Auswahl der Stichprobe, die Durchführung der Befragung sowie der Rücklauf und das Vorgehen bei der Datenaufbereitung beschrieben. Zuletzt wird die Struktur der Stichprobe dargestellt und mit amtlichen Daten der beiden Städte Darmstadt und Frankfurt am Main verglichen.
Industry classification groups firms into finer partitions to help investments and empirical analysis. To overcome the well-documented limitations of existing industry definitions, like their stale nature and coarse categories for firms with multiple operations, we employ a clustering approach on 69 firm characteristics and allocate companies to novel economic sectors maximizing the within-group explained variation. Such sectors are dynamic yet stable, and represent a superior investment set compared to standard classification schemes for portfolio optimization and for trading strategies based on within-industry mean-reversion, which give rise to a latent risk factor significantly priced in the cross-section. We provide a new metric to quantify feature importance for clustering methods, finding that size drives differences across classical industries while book-to-market and financial liquidity variables matter for clustering-based sectors.
Dynamics of life course family transitions in Germany: exploring patterns, process and relationships
(2023)
This paper explores dynamics of family life events in Germany using discrete time event history analysis based on SOEP data. We find that higher educational attainment, better income level, and marriage emerge as salient protective factors mitigating the risk of mortality; better education also reduces the likelihood of first marriage whereas, lower educational attainment, protracted period, and presence of children act as protective factors against divorce. Our key finding shows that disparity in mean life expectancies between individuals from low- and high-income brackets is observed to be 9 years among males and 6 years among females, thereby illustrating the mortality inequality attributed to income disparities. Our estimates show that West Germans have low risk of death, less likelihood of first marriage, and they have a high risk of divorce and remarriage compared to East Germans.