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The Macroeconomic Effects of a European Deposit (Re-) Insurance Scheme

Recent proposals for a still missing European deposit insurance scheme (EDIS) argue in favor of a reinsurance framework. In this paper, we use a regime-switching open-economy DSGE model with bank default to assess the relative efficiency of such a scheme. We find that reinsurance by EDIS is more effective in stabilizing real activity, credit, and welfare than a national fiscal backstop. We demonstrate ...

Structural Vector Autoregressive Models with More Shocks than Variables Identified via Heteroskedasticity

In conventional structural vector autoregressive (VAR) models it is assumed that there are at most as many structural shocks as there are variables in the model. It is pointed out that heteroskedasticity can be used to identify more shocks than variables. However, even if there is heteroskedasticity, the number of shocks that can be identified is limited. A number of results are provided that allow ...

Active, or Passive? Revisiting the Role of Fiscal Policy in the Great Inflation

We reexamine whether pre-Volcker U.S. fiscal policy was active or passive. To do so, we estimate a DSGE model with monetary and fiscal policy interactions employing a sequential Monte Carlo algorithm (SMC) for posterior evaluation. Unlike existing studies, we do not have to treat each policy regime as distinct, separately estimated, models. Rather, SMC enables us to estimate the DSGE model over its entire ...

Drinking is Different! Examining the Role of Locus of Control for Alcohol Consumption

Unhealthy behavior can be extremely costly from a micro- and macroeconomic perspective and exploring the determinants of such behavior is highly important from an economist’s point of view. We examine whether locus of control (LOC) can explain alcohol consumption as an important domain of health behavior. LOC measures how much an individual believes in the causal relationship between her own actions ...

Biased beliefs in dynamic decisions

In many dynamic decision problems, the relevant market prices and budget constraints are random variables whose realizations lie in the future. This makes optimal decision-making difficult as optimality requires an accurate quantification and interpretation of the dynamic processes operating in the market. The studies in this project model and test the agents’ expectations about relevant...

The effect of the demographic change on inequality and the role of the pension system: Evidence from social security data and a dynamic structural life-cycle model

The demographic change poses numerous challenges to societies in developed countries. In particular, the increasing longevity and the related ageing of societies affect the organization and the financing of the welfare state. Therefore, most governments have introduced or are about to design reforms of the welfare state, most important of the pension system. At the same time the increasing...

On the Accuracy of Gravity-RAS Approaches Used for Inter-Regional Trade Estimation: Evidence Using the 2005 Inter-Regional Input–Output Table of Japan

In contrast to international trade, it is still difficult to find regionaltrade statistics within a nation. Given that the gravity model con-tinues to be very popular, we test two gravity-RAS approaches usedfor interregional trade estimation: a standard one and an extendedversion, which additionally estimates intra-regional flows. We assessthe accuracy with the help of two measures and for different ...

The Impact of Carbon Disclosure Mandates on Emissions and Financial Operating Performance

We examine whether a disclosure mandate for greenhouse gas emissions creates stakeholder pressure for firms to subsequently reduce their emissions. For UK-incorporated listed firms such a mandate was adopted in 2013. Using a difference-in-differences design, we find that firms affected by the mandate reduced their emissions – depending on the specification – by an incremental 14-18% relative to a control ...

On the Role of Population-based Surveys and Citizen Dialogues in Selecting Social Indicators

Virtual Digital Economy Seminar (VIDE) co-organized by DIW research associate Hannes Ullrich

The Virtual Digital Economy Seminar (VIDE) features current research projects by prominent researchers worldwide via video conference. Hannes Ullrich from the Firms and Markets Department is among the co-​organizers of this open online international and inter-​institutional seminar on the digital economy.All seminars are on Thursdays at 8:00am Los Angeles - 11:00am New York - 4:00pm London - 5:00pm ...