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DIW Discussion Papers 1249 / 2012
We analyse the relationship between the debt to GDP ratio and real per capita GDP growth for the euro area members by distinguishing between periods of sustainable and non-sustainable debt. Thresholds are theory-based and depend on the macroeconomic framework. If the interest rate exceeds nominal output growth, primary budget surpluses are required to achieve a sustainable debt ratio. The negative ...
2012| Christian Dreger, Hans-Eggert Reimers
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DIW Discussion Papers 1248 / 2012
This paper examines the degree of persistence of youth unemployment (total, male and female) in twenty-four countries by using two alternative measures: the AR coefficient and the fractional differencing parameter, based on short- and longmemory processes respectively. The evidence suggests that persistence is particularly high in Japan and some EU countries such as Spain, Portugal, Ireland and Finland, ...
2012| Guglielmo Maria Caporale, Luis A. Gil-Alana
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DIW Discussion Papers 1247 / 2012
In this paper we examine the Marshall-Lerner (ML) condition for the Kenyan economy. In particular, we use quarterly data on the log of real exchange rates, export-import ratio and relative (US) income for the time period 1996q1 - 2011q4, and employ techniques based on the concept of long memory or long-range dependence. Specifically, we use fractional integration and cointegration methods, which are ...
2012| Guglielmo Maria Caporale, Luis A. Gil-Alana, Robert Mudida
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DIW Discussion Papers 1246 / 2012
This paper empirically analyzes the relationship between migration and human trafficking inflows into Germany during the period between 2001 and 2010. My results suggest that migrant networks, measured by migrant stocks from a specific source country, have a causal linkage with the illicit, exploitative form of migration - human trafficking - from that respective country. However, the network effect ...
2012| Seo-Young Cho
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DIW Discussion Papers 1245 / 2012
The number of free trade agreements has increased substantially since 1980 despite efforts to promote multilateral trade liberalization. While there is evidence on the determinants of FTA formation, still little is known on the processing of trade agreements, particularly regarding the pre-implementation duration. This paper fills the research gap by using event data on the proposal, the negotiation, ...
2012| Florian Mölders
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DIW Discussion Papers 1244 / 2012
In this paper, we examine the effects of an airport expansion on the prices of houses and flats located under the planned flight corridors. We focus on the role of expectations about the exposure to noise and find that proximity to the planned corridors significantly reduces real estate prices in the affected areas, by around 41% to 60%, depending on the sample. Hereby, the various plans of expanding ...
2012| Andreas Mense, Konstantin A. Kholodilin
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DIW Discussion Papers 1243 / 2012
We estimate Okun coefficients for five different age cohorts for several Eurozone countries. We find a stable pattern for all countries: The relationship between business-cycle fluctuations and the unemployment rate is the strongest for the youngest cohort and gets smaller for the elderly cohorts.
2012| Oliver Hutengs, Georg Stadtmann
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DIW Discussion Papers 1242 / 2012
This paper argues that counter-cyclical liquidity hoarding by financial intermediaries may strongly amplify business cycles. It develops a dynamic stochastic general equilibrium model in which banks operate subject to financial frictions and idiosyncratic funding liquidity risk in their intermediation activity. Importantly, the amount of liquidity reserves held in the financial sector is determined ...
2012| Sören Radde
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DIW Discussion Papers 1241 / 2012
We assess the relevance of formal education for the productivity of the self-employed and distinguish between opportunity entrepreneurs, who voluntarily pursue a business opportunity, and necessity entrepreneurs, who lack alternative employment options. We expect differences in the returns to education between these groups because of different levels of control. We use the German Socio-economic Panel ...
2012| Frank M. Fossen, Tobias J. M. Büttner
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DIW Discussion Papers 1240 / 2012
Applying a financial assets approach, we analyze the returns and earnings risk of investments into different types of human capital. Even though the returns from investing in human capital are extensively studied, little is known about the properties of the returns to different types of human capital within a given educational path. Using information from the German Micro Census, we estimate the ...
2012| Daniela Glocker, Johanna Storck
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DIW Discussion Papers 1239 / 2012
The number of parties in government is usually considered to increase spending. We show that this is not necessarily the case. Using a new method to detect close election outcomes in multi-party systems, we isolate truly exogenous variation in the type of government. With data from municipalities in the German state of Bavaria, we show in regression discontinuity-type estimations that absolute majorities ...
2012| Ronny Freier, Christian Odendahl
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DIW Discussion Papers 1238 / 2012
Multiplicative growth processes that are subject to random shocks often have a skewed distribution of outcomes. A simple laboratory experiment shows that participants either strongly underestimate skewness or ignore it completely. The participants' choices reveal bounds on their subjective medians of a financial asset's price that is subject to stochastic growth. The observed bias in expectations is ...
2012| Ludwig Ensthaler, Olga Nottmeyer, Georg Weizsäcker
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DIW Discussion Papers 1237 / 2012
The literature argues that research spin-offs (RSOs)-enterprises originating from a university or research institute-appear to have higher innovative potential and capabilities than other start-ups, at least in the early stages of their development. Yet, little is known about the innovative performance of these companies at later development phases. Thus, the main goal of this study is to investigate ...
2012| Anna Lejpras
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DIW Discussion Papers 1236 / 2012
Over the past decade, research explaining cross country income differences has increasingly pointed to the dominant role of total factor productivity (TFP) gaps as opposed to factor accumulation. Nevertheless, it is a widely held belief that a country's ability to absorb and implement technologies is tied to its human capital. In this paper, we implement this idea in a novel specification and explore ...
2012| Areendam Chanda, Beatrice Farkas
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DIW Discussion Papers 1235 / 2012
It is emphasized that the shocks in structural vector autoregressions are only identified up to sign and it is pointed out that this feature can result in very misleading confidence intervals for impulse responses if simulation methods such as Bayesian or bootstrap methods are used. The confidence intervals heavily depend on which variable is used for fixing the sign of the initial responses. In particular, ...
2012| Helmut Lütkepohl
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DIW Discussion Papers 1234 / 2012
Microsimulation methods and models of labor market decisions have attracted a lot of attention as an approach to the assessment of consequences of family related policies in the area of labor market and fertility. We set these models in the context of relevant demographic theories and present them from the point of view of their potential as tool to guide effective policy making with the aim to reconcile ...
2012| Anna Kurowska, Michal Myck, Katharina Wrohlich
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DIW Discussion Papers 1233 / 2012
The recession the United States economy entered in December of 2007 is considered to be the most severe downturn the country has experienced since the Great Depression. In this paper we decompose the changes in the unemployment rate by examining worker ows into and out of unemployment during the last four recessions in the United States with a special focus on the industry groups. Since the most recent ...
2012| Yelena Takhtamanova, Eva Sierminska
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DIW Discussion Papers 1232 / 2012
In this paper we examine the role of mortgage equity withdrawal in explaining the decline of the US saving rate, since when house prices rise and mortgage rates are low, homeowners have an incentive to withdraw housing equity and this may affect the saving rate. We estimate a Vector Error Correction (VEC) model including the saving rate, asset prices, equity withdrawal and interest rates and find that ...
2012| Guglielmo Maria Caporale, Mauro Costantini, Antonio Paradiso
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DIW Discussion Papers 1231 / 2012
This paper empirically investigates the relevance of liquidity constraints and excess sensitivity in intertemporal household consumption. Using a pseudo panel that has been constructed on rich German consumption survey data, we estimate the consumption responses to permanent and transitory income shocks, as well as the presence of excess sensitivity to anticipated income changes. A switching regression ...
2012| Martin Beznoska, Richard Ochmann
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DIW Discussion Papers 1230 / 2012
Economic agents using information that is not incorporated in the econometric model is seen as a possible reason for why nonfundamental shocks are important in econometric models. Allowing for nonfundamental shocks in structural vector autoregressive (SVAR) analysis by considering moving average (MA) representations with roots in the complex unit circle is a possible response to the problem. A case ...
2012| Helmut Lütkepohl