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DIW Discussion Papers 1379 / 2014
The transformation of the European energy system requires substantial investment in transmission capacity to facilitate cross-border trade and to efficiently integrate renewable energy sources. However, network planning in the EU is still mainly a national prerogative. In contrast to other studies aiming to identify the pan-European (continental) welfare-optimal transmission expansion, we investigate ...
2014| Daniel Huppmann, Jonas Egerer
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DIW Discussion Papers 1378 / 2014
The common European electricity market requires both market integration and transmission grid expansion, including trans-border interconnectors. Although the benefits of increased interconnectivity are widely acknowledged, expansion of interconnectors is often very slow. This paper gathers insights on the reasons behind this “grid-lock” drawing on the study of the German-Polish border. Although two ...
2014| Lidia Puka, Kacper Szulecki
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DIW Discussion Papers 1377 / 2014
One of the leading criticisms of the Efficient Market Hypothesis (EMH) is the presence of so-called “anomalies”, i.e. empirical evidence of abnormal behaviour of asset prices which is inconsistent with market efficiency. However, most studies do not take into account transaction costs. Their existence implies that in fact traders might not be able to make abnormal profits. This paper examines whether ...
2014| Guglielmo Maria Caporale, Luis Gil-Alana, Alex Plastun, Inna Makarenko
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DIW Discussion Papers 1376 / 2014
Do timing and time diversification improve the average investor's stock market return? Contrary to literature's scenario of wealthy investors, average investors invest each month over life. Many purchases prevent investors from buying at peak, but horizons decrease, giving latter investments less time to offset losses. This paper accommodates timing using internal rates of return, facilitating the ...
2014| Dirk Ulbricht
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DIW Discussion Papers 1375 / 2014
This paper investigates whether there are bubbles in stock prices. We do this using a previously studied structural vector autoregressive (SVAR) model claiming to distinguish fundamental and non-fundamental shocks to real stock prices. TheSVAR model relies on an identification restriction in order to correctly label the shocks. We test this restriction by means of a Markov switching-SVAR (MS-SVAR) ...
2014| Anton Velinov, Wenjuan Chen
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DIW Discussion Papers 1374 / 2014
This paper investigates empirically the consumer demand of environmentally relevant goods for Germany, as well as their relationship to the demand for leisure. Higher prices for energy goods like gas, electricity or fuel oil due to higher indirecttaxation amongst others may have serious welfare and distributional effects for households. Also, there is very little evidence of the labor market implications ...
2014| Martin Beznoska
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DIW Discussion Papers 1373 / 2014
We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 anti-diabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multiproduct firms, we then recover the marginal costs and ...
2014| Tomaso Duso, Annika Herr, Moritz Suppliet
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DIW Discussion Papers 1372 / 2014
In this paper we investigate natural gas producer's reactions to changes in market prices. We estimate price elasticities of aggregated supply in the most competitive market for natural gas: the United States. Using monthly time series data form 1987 to 2012 our analysis is based on an Autoregressive Distributed Lag (ARDL) Bound Cointegration approach to obtain short and long-run elasticities of natural ...
2014| Micaela Ponce, Anne Neumann
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DIW Discussion Papers 1371 / 2014
The impact of environmental regulation on technology diffusion and innovations is studied using a unique data set of German residential buildings. We analyze how energy efficiency regulations, in terms of minimum standards, affects energy-use in newly constructed buildings and how it induces innovation in the residential-building industry. The data used consists of a large sample of German apartment ...
2014| Makram El-Shagi, Claus Michelsen, Sebastian Rosenschon
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DIW Discussion Papers 1370 / 2014
Assessing and quantifying the impacts of technological, economic, and policy shifts in the global energy system requires large-scale numerical models. We propose a dynamic multi-fuel market equilibrium model that combines endogenous fuel substitution within demand sectors and in power generation, detailed infrastructure capacity constraints and investment, as well as strategic behaviour and market ...
2014| Daniel Huppmann, Ruud Egging
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DIW Discussion Papers 1369 / 2014
In line with the neoclassical growth model a persistent stream of oil revenues might have a long lasting impact on GDP per capita in oil exporting countries through higher investment activities. This relationship is explored for Iran and the countries of the Gulf Cooperation Council (GCC) using (panel) cointegration techniques. The existence of cointegration between oil revenues, GDP and investment ...
2014| Christian Dreger, Teymur Rahmani
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DIW Discussion Papers 1368 / 2014
We conduct detailed analysis of the Polish Household Budget Survey data for the years 2006-2011 with the focus on its representativeness from the point of view of microsimulation analysis. We find important discrepancies between the data weighted with baseline grossing-up weights and official statistics from other sources. A number of re-weighting exercises is examined from the point of view of the ...
2014| Michal Myck, Mateusz Najsztub
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DIW Discussion Papers 1367 / 2014
We endogenize asset liquidity in a dynamic general equilibrium model with search frictions on asset markets. In the model, asset liquidity is tantamount to the ease of issuance and resaleability of private financial claims, which is driven by investors' participation on the search market. Limited resaleability of private claims creates a role for liquid assets, such as government bonds or fiat money, ...
2014| Wei Cui, Sören Radde
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DIW Discussion Papers 1366 / 2014
Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the ...
2014| Johannes Geyer, Peter Haan, Katharina Wrohlich
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DIW Discussion Papers 1365 / 2014
This paper explores the long run relationship between public and private investment in the euro area in terms of capital stocks and gross investment flows. Panel techniques accounting for international spillovers are employed. While private and public capital stocks are cointegrated, the evidence is quite fragile for public and private investment flows. They enter a long run relationship only after ...
2014| Christian Dreger, Hans-Eggert Reimers
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DIW Discussion Papers 1364 / 2014
How do banks choose their debt maturity structure when credit markets are subject to information frictions? This paper proposes a model of equilibrium maturity choice with asymmetric information and endogenous roll-over risk. We show that in the presence of public signals about firms' creditworthiness (credit ratings), firms choose to expose themselves to positive roll-over risk in order to minimize ...
2014| Philipp König, David Pothier
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DIW Discussion Papers 1363 / 2014
This paper analyzes the trade-offs for using feed-in tariffs or tenders to remunerate different scales of solar photovoltaics (PV) projects. In recent years, European countries increasingly combined feed-in tariffs for small renewables systems with tenders for large installations. This study develops an analytic framework to quantify deployment effectiveness of responsive feed-in tariff adjustment ...
2014| Thilo Grau
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DIW Discussion Papers 1362 / 2014
A canonical two country-two good model with standard preferences does not address three classic international macroeconomic puzzles as well as two well-known asset pricing puzzles. Specifically, under financial autarky, it does not account for the high real exchange rate (RER) volatility relative to consumption volatility (RER volatility puzzle), the negative RER-consumption differentials correlation ...
2014| Guglielmo Maria Caporale, Michael Donadelli, Alessia Varani
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DIW Discussion Papers 1361 / 2014
Stated survey measures of risk preferences are increasingly being used in the literature, and they have been compared to revealed risk aversion primarily by means of experiments such as lottery choice tasks. In this paper, we investigate educational choice, which involves the comparison of risky future income paths and therefore depends on risk and time preferences. In contrast to experimental settings, ...
2014| Frank M. Fossen, Daniela Glocker
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DIW Discussion Papers 1360 / 2014
In this paper, we evaluate the forecasting ability of 115 indicators to predict the housing prices and rents in 71 German cities. Above all, we are interested in whether the local business confidence indicators can allow substantially improving the forecasts, given the local nature of the real-estate markets. The forecast accuracy of different predictors is tested in a framework of a quasi out-of-sample ...
2014| Konstantin A. Kholodilin, Boriss Siliverstovs