Abstract: Does distance matter for the volatility of international real and financial transactions? We show that it does, in addition to its well-established relevance for the level of trade. A simple model of trade with endogenous markups shows that demand shocks have a larger impact on trade between more distant countries. We test this implication in two steps, relying on a broad range of real...
Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate preference parameters of a representative consumer, for use in policy evaluation. Focusing on dynamic models with time-separable preferences, we show that aggregation holds if, and only if, momentary utility functions fall in the Identical-Shape Harmonic Absolute-Risk Aversion (ISHARA) utility class, ...
Based on highly comparable data from the OECD PIAAC Programme, this note analyzes the relationship between generalized trust and cognitive skills among 30 countries around the world. The results show that the strength and direction of the relationship is not a universal characteristic but varies substantially among countries worldwide. A detailed descriptive analysis of this variation provides evidence ...
Claudia M. Buch Vice President, Deutsche Bundesbank Welcome by Lukas Menkhoff | Head of Department International Economics at DIW Berlin Moderation by Dorothea Schäfer | Research Director Financial Markets at DIW BerlinInternational economic policy discussion centers around the volatility of capital flows and the impact on exchange rates, asset prices, and credit. Banks continue to account...
