News and Press Releases of DIW Berlin http://www.diw.de/en/diw_02.c.288763.en News and Press Releases en http://diw.de/sixcms/media.php/37/diw_logo_farbe_mini.jpg DIW Berlin http://diw.de/ Capital market integration and macroeconomic stability http://www.diw.de/sixcms/detail.php?id=diw_01.c.569121.en After the establishment of the Banking Union, the European Commission is working on measures to foster capital market deepening in Europe. Key goals for a European Capital Markets Union are to provide firms with alternative funding sources to bank credit and to make economies more resilient to local shocks through better international risk sharing. While open capital markets can improve portfolio diversification, growth and welfare, the recent financial crisis was a reminder that capital market integration also carries risks in terms of economic stability. This article summarizes pros and cons of capital market openness and discusses stability implications of different forms of capital market integration.


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Fri, 17 Nov 2017 10:54:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.569121.en
Federal state comparison of renewable energy sources: Baden-Württemberg is the new leader, beating out Mecklenburg Western Pomerania and Bavaria for the top spot http://www.diw.de/sixcms/detail.php?id=diw_01.c.569458.en Baden-Württemberg, Mecklenburg Western Pomerania, and Bavaria are the leading federal states in the field of renewable energy. That is the result from a comparison of the federal states which was compiled by the German Institute for Economic Research (DIW Berlin) and the Center for Solar Energy and Hydrogen Research Baden-Württemberg (Zentrum für Sonnenenergie- und Wasserstoff-Forschung Baden Württemberg, ZSW) on behalf of and in cooperation with the Renewable Energies Agency (Agentur für Erneuerbare Energien, AEE) for the fifth time. Using 59 indicators, the analysis assesses the federal states’ political efforts and achievements in using renewable energy sources as well as the related economic and technological changes in detail. Hesse, Berlin, and the Saarland were ranked the lowest.


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Thu, 16 Nov 2017 02:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.569458.en
The use of financial market variables in forecasting http://www.diw.de/sixcms/detail.php?id=diw_01.c.569173.en Financial market indicators can provide valuable information for forecasting macroeconomic developments. In response to the global financial crisis of 2007/2008, the role of financial variables for forecasting has been revisited, and new empirical and theoretical forecasting methods able to explicitly incorporate financial market information have been developed. This roundup discusses characteristics of financial variable movements and the relation to business cycles. It furthermore summarizes some of the new theoretical and empirical approaches at hand for forecasting macroeconomic variables with financial market information, and highlights main challenges forecasters willing to consider financial market information in forecasting exercises have to face.


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Wed, 15 Nov 2017 10:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.569173.en
Songül Tolan has successfully defended her dissertation http://www.diw.de/sixcms/detail.php?id=diw_01.c.569321.en Songül Tolan, who works at the Public Economics department, has successfully defended her dissertation at the Freie Universität Berlin.

The dissertation with the title "Partial Retirement, Financial Student Aid, and Labor Market Outcomes" was supervised by Prof. Dr. Peter Haan (DIW Berlin, Freie Universität Berlin) and Prof. Dr. Arthur van Soest (Tilburg University).

We congratulate Songül on her success and wish her all the best for her future career.


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Tue, 14 Nov 2017 10:03:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.569321.en
Vierteljahrsheft zur Wirtschaftsforschung: „EU Capital Markets Union: an alluring opportunity or a blind alley? The macro-perspective: CMU and risk-sharing“ http://www.diw.de/sixcms/detail.php?id=diw_01.c.568970.en Fostering cross-country risk-sharing via capital markets is a central macroeconomic objective of the Capital Markets Union. Risk-sharing means that individuals, firms or public-sector authorities, located in a region or country suffering from a temporary and idiosyncratic economic shock, would be able to compensate the regional output gap (i. e., lack of aggregate demand, increasing unemployment and pressure on wages) via income arising from financial claims on the output of unaffected member states within the European Monetary Union (and within the European Union). Likewise, difficulties in access to funds for households or firms in a crisis country would be mitigated as sources in the financial markets of partner countries, unconstrained by the umbilical nexus to ‘their’ state, might be tapped. Of course, such complete risk sharing is not achievable; neither in a bank-based nor in a market-based financial system. However, the CMU action plan is expected to enable European Union member states to make substantial steps in this direction. In the light of these high expectations, the question arises: Does the CMU action plan set the appropriate priorities and can it ultimately deliver, that is: Is the risk sharing potential suggested in the plan realistic? The authors of the VJH on the macro-perspective of the Capital Markets Union provide an assessment of the risk-sharing potential and derive policy recommendations for ways of improving the CMU project. 

Content of issue 02.2017

  • Hans-Helmut Kotz and Dorothea Schäfer
    EU Capital Markets Union: an alluring opportunity or a blind alley? The macro-perspective: CMU and risk-sharing

  • Andreas Breitenfellner and Helene Schuberth
    Europe needs more than a Capital Markets Union—focus on the integration of euro area sovereign debt markets

  • Jürgen Schaaf
    Does EMU require CMU?

  • Hans-Helmut Kotz, Willi Semmler and Ibrahim Tahri
    Capital Markets Union and monetary policy performance: comes financial market variety at a cost

  • Jan Friedrich and Matthias Thiemann
    Capital Markets Union: the need for common laws and common supervision

  • Paolo D'Imperio and Waltraud Schelkle
    What difference would a Capital Markets Union make for risk-sharing in the EU?

  • Hans-Helmut Kotz and Dorothea Schäfer
    Can the Capital Markets Union deliver?

Vierteljahrshefte zur Wirtschaftsforschung 02.2017 | 86. Jahrgang


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Fri, 10 Nov 2017 11:08:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568970.en
Christian Krekel has successfully defended his dissertation http://www.diw.de/sixcms/detail.php?id=diw_01.c.568976.en Christian Krekel, who worked at the department of German Socio-Economic Panel (SOEP), has successfully defended his dissertation at the Paris School of Economics.

The dissertation with the title "Evaluating the Non-Monetary Impacts of Major Events, Infrastructure, and Institutions" was supervised by Prof. Dr. Claudia Senik (Paris School of Economics) and Prof. Dr. Gert G. Wagner (DIW Berlin, Technical University of Berlin).

We congratulate Christian on his success and wish him all the best for his future career.


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Fri, 10 Nov 2017 09:57:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568976.en
Why are fewer women working in STEM fields? Girls underestimate their math abilities in school http://www.diw.de/sixcms/detail.php?id=diw_01.c.568725.en Boys consider themselves to be more gifted in mathematics than their grades indicate, whereas girls think their language skills are stronger. Differences in students’ self-evaluation of their skills are evident by the fifth grade and remain present throughout higher grades

Boys think higher of their math abilities in school than girls do – to an extent that is not justified by their actual grades. Research by the German Institute for Economic Research (DIW Berlin) shows that by the fifth grade, male and female students’ respective self-assessments of their math skills deviate from each other significantly. This difference remains present to a large extent up to and throughout the twelfth grade. These findings are the results of a study by Felix Weinhardt, a research associate in the Department of Education and Family at DIW Berlin, who evaluated data from the National Educational Panel Study (NEPS), which is representative for German students.


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Wed, 08 Nov 2017 10:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568725.en
Abolishing the final withholding tax leads to tax revenue losses and barely burdens high-income groups http://www.diw.de/sixcms/detail.php?id=diw_01.c.568703.en Small revenue and distribution effects – Overall, slight tax revenue losses due to a period of low interest rates – Raising the final withholding tax rate to over 25 percent would result in moderate additional revenue

Abolishing the final flat-rate 25 percent withholding tax on unearned income makes sense neither from a fiscal nor a distribution point of view as long as interest rates are so low. If capital income were to be reintegrated into the income tax rate, slight tax revenue losses of 73 million euros would be expected, when taxing 60 percent of dividends and capital gains (partial-income rule) and fully deducting income-related expenses. This is the conclusion of a recent study by the German Institute for Economic Research (DIW Berlin). “Abolishing the withholding tax doesn’t do much in terms of fairness if you understand ‘fair’ to mean higher taxes on high capital income,” says DIW tax expert Stefan Bach. High-income groups would barely be burdened by the abolishment of the withholding tax while medium and low-income groups would experience marginal reductions in dividends. In addition, the amount of administrative burdens in the taxation procedure would increase. By contrast, increasing the withholding tax would lead to moderate additional tax revenues and have a progressive impact, but could worsen investment conditions in Germany.


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Wed, 08 Nov 2017 09:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568703.en
Alumnus of the DIW Graduate Center awarded tenured professorship at Cornell University http://www.diw.de/sixcms/detail.php?id=diw_01.c.568881.en Nicolas R. Ziebarth (35), a student of the DIW Graduate Center’s first class, was promoted to “Associate Professor with indefinite tenure” in the Department for Policy Analysis and Management at Cornell University in Ithaca, New York (USA). Ziebarth’s area of research is applied health and labor economics.

“It’s especially remarkable for an economist with a Ph.D. from a German university to be granted a professorship at an American Ivy League university. Nico Ziebarth achieved his position as a tenured Associate Professor after the shortest possible time as an Assistant Professor,” explained, Professor Georg Weizsäcker (Humboldt University of Berlin and DIW Berlin), the dean of the Graduate Center. “At the same time, Nicolas Ziebarth’s path shows that doctoral studies at DIW are at an internationally competitive level.”

In 2006, the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung, DIW Berlin) began a structured doctoral studies program, the „DIW Graduate Center“ which helps around 15 doctoral candidates per year prepare for writing their dissertation at a university and supports them in their research.

“We succeeded in systematically integrating external research institutions into doctoral candidates’ education in universities with the help of ‘graduate schools’ such as DIW’s Graduate Center,” said DIW Berlin executive board member Gert G. Wagner “Nico Ziebarth’s appointment as a tenured professor to an Ivy League university shows that the quality of the dissertations and research has clearly benefited from this integration.”

After completing his studies at the Humboldt University of Berlin (HU) and Berlin University of Technology (TU), Nicolas Ziebarth worked at the “Socio-Economic Panel Study” (SOEP) research infrastructure at DIW Berlin. His dissertation, “Sickness Absence and Economic Incentives,” was completed at TU Berlin and supervised by Gert G. Wagner. The paper used data from the SOEP and received the Upjohn Institute Dissertation Award 2011 in the United States.

In addition to publications in distinguished economic journals (Journal of Public Economics, Journal of Human Resources, The Economic Journal), Ziebarth has also been published in multidisciplinary journals such as Health Policy and Social Science & Medicine and won many awards for his work. Furthermore, he has raised around 1.2 million dollars for third-party-funded projects.

Ziebarth supervised dissertations of doctoral candidates at SOEP, such as Dr. Christian Krekel, a Graduate Center alumnus who successfully defended his dissertation (“Evaluating the Non-Monetary Impacts of Major Events, Infrastructure, and Institutions”) in 2017 at the Paris School of Economics. For his research, Christian Krekel was awarded the renowned FEEM Award from the European Economic Association.

Ziebarth also supervised Dr. Peter Eibich’s dissertation, “Regional Variation and Aging in Health Economics.” Starting December 1, 2017, Eibich will be the Deputy Research Team Leader for labor market demographics at the Max Planck Institute for Demographic Research (Max-Planck-Institut für Demografische Forschung) in Rostock, Germany. He has been working at the University of Oxford since leaving SOEP in 2015.

Homepage of Prof. Dr. Nicolas R. Ziebarth

Homepage of Dr. Peter Eibich

Homepage of Dr. Christian Krekel


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Wed, 08 Nov 2017 08:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568881.en
Youth in Europe have major labor market problems despite lower unemployment http://www.diw.de/sixcms/detail.php?id=diw_01.c.568108.en The youth unemployment is still much higher than the unemployment of those aged 25 years and older – Decrease in unemployment primarily due to a drop in the number of young people and the greater number remaining in education – Political measures against youth unemployment prove ineffective

Although the youth unemployment rate in the EU has plummeted in recent years, it is still difficult for teens and young adults to find employment. For example, the unemployment rate in the 15-24 age group is still 2.5 times as high as that of person aged 25 years or more. The decrease in unemployment is primarily caused by the demographic shift and a lower participation in the labor market due to changed education behavior. Political measures for countering youth unemployment, such as the EU Youth Guarantee, do not have recognizable effects. These are the main findings of a current study by the German Institute for Economic Research (DIW Berlin). Newly created employment opportunities for young people are almost exclusively fixed-term jobs. The share of part-time jobs has also increased. Due to their more practical training, young people in Central Europe have fewer problems finding employment than persons 25 years and over, unlike the situation in other parts of Europe – particularly in the south.


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Thu, 02 Nov 2017 04:07:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568108.en
Central banks should communicate their interventions in the foreign exchange market http://www.diw.de/sixcms/detail.php?id=diw_01.c.568085.en Central banks frequently intervene in foreign exchange markets. Using recognized criteria this report analyzes the probability of success in a data set of 4,500 intervention episodes in 33 countries. It is important to differentiate among exchange rate regimes because each focuses on a different goal. While flexible exchange rate regimes intervene less frequently and seek to influence trends, other regimes target exchange rate stabilization by establishing a band within which the exchange rate can float. Interventions are generally more successful when they involve larger volumes, follow the exchange rate trend, and are oriented on the fundamental value. When decision makers also communicate their interventions or changes to exchange rate policies, the effects of these are likely to be stronger. Central bankers should therefore complement their interventions with communication to improve their likelihood of success. [...]

The full report by Lukas Menkhoff and Tobias Stöhr in DIW Economic Bulletin 44/2017


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Thu, 02 Nov 2017 09:05:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568085.en
DIW Economic Barometer October 2017: the German economy’s golden autumn http://www.diw.de/sixcms/detail.php?id=diw_01.c.568035.en The German economy’s strong upswing continues. At 112 points, the Economic Barometer published by the German Institute for Economic Research (DIW Berlin) continues to signal GDP growth that is well above average: 0.7 percent in the third quarter and 0.9 percent in the fourth. “The German economy is heading toward 2018 at full speed,” said Ferdinand Fichtner, head of forecasting at DIW.


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Wed, 01 Nov 2017 10:29:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.568035.en
There is a lot left to do to reach gender equality in Germany: Editorial by Katharina Wrohlich http://www.diw.de/sixcms/detail.php?id=diw_01.c.567930.en In Germany, four political parties are currently struggling to forge a mutual platform of government. In the wake of the last election, the share of female MPs in the German parliament, the Bundestag, declined significantly. Gender equality nevertheless needs to play a central role in the new government program. On the labor market, gender equality is still a faraway goal. The same is also true for care work, which includes day care for children and nursing care for relatives. There are still major differences between men and women when it comes to opportunities for participation, promotion, and higher pay in professional life.

The full editorial by Katharina Wrohlich in DIW Economic Bulletin 43/2017


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Thu, 26 Oct 2017 03:41:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567930.en
Gender pay gap varies greatly by occupation http://www.diw.de/sixcms/detail.php?id=diw_01.c.567932.en The German labor market is characterized by marked occupational segregation between women and men. The median earnings in female dominated occupations are lower than those in male dominated professions. This is one of the reasons for the gender pay gap. However, there are also large differences in earnings between men and women within occupations. These profession-specific gender pay gaps are smaller in professions with a high proportion of employees in the public sector. This finding indicates that more transparency with respect to earnings could reduce the gender pay gap in the private economy.

The full report by Katharina Wrohlich and Aline Zucco in DIW Economic Bulletin 43/2017


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Thu, 26 Oct 2017 03:30:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567932.en
Gender gaps in pensions and health: Germany, France, and Denmark http://www.diw.de/sixcms/detail.php?id=diw_01.c.567934.en This study quantifies gender-specific differences in retirement income in Germany, Denmark, and France. We show that the “gender pension gap” in Germany is higher than in France and much higher than in Denmark. This ranking is similar to the ranking in the gender pay gap, where Germany has also the highest gender difference. The authors also investigate gender-specific differences in health, i.e. the so-called “gender health gap”, in the same age group. Self-assessed general health in 2013 reveals no significant differences between men and women in the countries studied. However, gender-specific differences in depressive symptoms follow a similar pattern as the gender pension gap: Denmark has the lowest difference between the sexes. Although the study does not measure causal relationships between income and health, the results indicate that measures to reduce the gender pay gap do not only reduce differences during the economically active phase; they may also lead to a reduction in the gender pension gap and in women’s susceptibility to depressive symptoms.

The full report by Peter Haan, Anna Hammerschmid, and Carla Rowold in DIW Economic Bulletin 43/2017


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Thu, 26 Oct 2017 03:29:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567934.en
Vierteljahrshefte zur Wirtschaftsforschung: „EU Capital Markets Union: an alluring opportunity or a blind alley? Concept and microperspectives of CMU“ http://www.diw.de/sixcms/detail.php?id=diw_01.c.567873.en On September 30, 2015, the European Commission adopted an action plan to create a European Capital Markets Union (CMU). The chief purpose was to ease the access of small and medium-sized companies as well as start-ups to funds, in particular through raising funds in public capital markets. CMU should also create an environment conducive to long-term, sustainable investment, including in infrastructure. Concurrently, CMU should produce a more marketbased and unified financing system within the European Union.

This proposal for deep structural change in national financial markets rests on two explicit diagnoses: (1) Europe is too bank-dependent, which impedes growth. And, (2) an integrated (de-segmented) capital market allows for more cross-regional risk sharing, as appropriate in a monetary union.

The core goals of the proposed CMU are (1) promoting the securitization of bank loans to SMEs; and (2) the channeling of private savings directly (without involvement of banks) into capital market products. In its green paper, “Building a Capital Markets Union”, the European Commission holds that, “stronger capital markets would complement banks as a source of financing, and would unlock more investment for all companies, especially SMEs, and for infrastructure projects.” In addition, a CMU would “attract more investment into the EU from the rest of the world; and make the financial system more stable by opening up a wider range of funding sources.” This, of course, begs the question, and raises a policy issue at the same time: Are current plans for implementing a European CMU capable of turning these promises into reality?

Upon its launching, the CMU initiative touched off controversial debates. Proponents hold that CMU can reduce financial fragmentation in Europe, support cross-border financial flows and foster access to finance, especially for SMEs. In contrast, critics consider CMU as an initiative ignoring analytical as well as practical lessons taught by the Great Financial Crisis, and resuming the financial deregulation efforts, betting again on the wrong set of institutions and instruments.

In two issues of the Vierteljahrsheft zur Wirtschaftsforschung, we address the major aspects, having a bearing on this decisive policy matter. Issue 1 focusses on the EU Capital Markets Union’s concept and its consequences from a micro perspective. Issue 2 takes a macroeconomic or systemic angle, analyzing inter alia corollaries for monetary policy and risk-sharing across the Euro Area.

Content of issue 01.2017

  • Hans-Helmut Kotz and Dorothea Schäfer
    EU Capital Markets Union: an alluring opportunity or a blind alley? Concept and micro-perspectives of CMU
  • Michael Thiel
    A methodological perspective on the Capital Markets Union: using economics to derive effective policy measures
  • Grégory Levieuge and Jean-Paul Pollin
    Ambitions and limits of financial disintermediation in the Euro Area
  • Andreas Bley and Jan Philip Weber
    Capital Markets Union: deepening the Single Market makes sense, but don’t expect too much
  • Markus Demary
    Challenges for the European Capital Markets Union: reviving financial integration and safeguarding financial stability
  • Karl-Peter Schackmann-Fallis and Sonja Scheffler
    Aligning financial systems to meet the needs of citizens and enterprises
  • Horst Gischer and Christian Ilchmann
    CMU – a threat to the German banking sector?
  • Helmut Kraemer-Eis and Frank Lang
    Access to funds: how could CMU support SME financing?
  • Peter Cornelius
    The structure and integration of the European buyout industry
  • Dorothea Schäfer and Andreas Stephan
    Innovation and Investment Funding in the post-crisis period: have financing patterns and financial constraints of German firms changed?

Vierteljahrshefte zur Wirtschaftsforschung 01.2017


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Thu, 26 Oct 2017 01:20:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567873.en
Day care centers: family expenditures increased significantly at some points between 1996 and 2015 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567254.en Private household expenditures on child care in centers have significantly risen: from an average of 98 euros per month in 2005 to just under 171 euros in 2015 for a child under three and for children three and older (“Kindergarten” age group), from 71 to 97 euros in the period between 1996 and 2015. At the same time, more and more households are completely exempt from paying fees for day care. However, relative to their income, households on or below the poverty line that have day care expenditures still pay virtually the same amount as other households. For the first time, based on data from the Socio-Economic Panel (SOEP) and the special study Families in Germany (FiD), the present report shows trends in day care expenditures in recent years and who is carrying how much of a burden as a result. Lower income households and single parents in the Kindergarten age group have been affected to a lesser extent or not at all by increases in day care expenditures over the years. Nevertheless, in the future progressive fee scales should be implemented more thoroughly and, above all, uniformly throughout the federal states. It is not necessary to make day care universally free of charge because households in upper income groups have expressed a high willingness to pay. This potential has not been fully utilized and could be enhanced—especially if public money is used to improve day care quality.

The full report by Sophia Schmitz, C. Katharina Spieß, and Juliane F. Stahl in DIW Economic Bulletin 42/2017


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Thu, 19 Oct 2017 09:21:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.567254.en
Microenterprises in Developing Countries: Is there Growth Potential? http://www.diw.de/sixcms/detail.php?id=diw_01.c.566624.en Microenterprises account for a large fraction of employment in developing countries and they are likely to increase in importance in the future. In Sub-Saharan Africa, for example, around 8 million additional jobs need to be created annually in order to cope with the increasing number of new entrants into the labour market (The World Bank, 2013). As microenterprises typically only provide subsistence income to few individuals the question remains whether they have the potential to grow and to contribute to the creation of jobs.

Studies suggest that many businesses do indeed have the potential to grow. However, they often lack the necessary funds due to imperfect credit markets, insufficient household savings or behavioral reasons and missing information to exploit their potential. Policy interventions to overcome these issues show some promising results. 


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Fri, 13 Oct 2017 11:00:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.566624.en
SET-Nav project http://www.diw.de/sixcms/detail.php?id=diw_01.c.566782.en DIW on the 4th and 5th of October, 2017 invited representatives from 14 research institutes across Europe to convene in Berlin. The SET-Nav project under the direction of Vienna University of Technology focuses on establishment of a clean, safe, and efficient energy pathways for the European SET Project.

The project partners, including the NTNU Trondheim (Norway), Universidad Comillas Madrid and Fraunhofer ISI model long term and low-carbon Strategic Energy Technology (SET) plan and examine the characteristics of innovation throughout the energy sector. A major and novel contribution of the project is the consideration of not only the energy sector, but also transport, industry, and building infrastructure.

During the meetings at DIW Berlin, the halfway status of various three year case studies from different sectors were examined. Included in the assessment was the project led by DIW Berlin, which analysis the use of CCS technology in power plants and in industry across Europe, and the implementation of an independent CO2 pipeline infrastructure. A second DIW case study currently in progress, focuses on the need for further expansion of natural gas pipelines to support the growing share of renewable energies in European grid infrastructure. Complimentary to the discussion of individual case studies, researchers also assessed how various models could be exchanged digitally more efficiently with the integration of the project partner, IIASA.

As part of the SET-Nav project, modeling techniques are also taught to external and junior researchers during the semi- annual method workshops. The next project meeting dedicated to web modeling will take place in Madrid in March of 2018.


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Wed, 11 Oct 2017 09:07:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.566782.en
Financial literacy promotes financial inclusion in both poor and rich countries http://www.diw.de/sixcms/detail.php?id=diw_01.c.566675.en For social and economic reasons, national economies benefit from the inclusion of as many people as possible in financial services. In a cross country study, the present study shows that financial literacy for the general population promotes financial inclusion. This relationship goes beyond the effect of higher economic or financial development. And the effect of higher levels of financial literacy is greatest on the “use of financial products” in financial systems that are more developed. On the contrary, the educational effect on “access to finance” is greatest for countries that are financially less developed. Economic policy that targets financial inclusion should therefore not only concentrate on financial infrastructure, but also on improving financial literacy.

The full report by Antonia Grohmann and Lukas Menkhoff in DIW Economic Bulletin 41/2017 


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Wed, 11 Oct 2017 09:01:00 +0200 http://www.diw.de/sixcms/detail.php?id=diw_01.c.566675.en