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Monetary and Fiscal Interactions

Public debt has reached historically high levels in many advanced economies and continues to grow at an unprecedented pace. This development has brought questions of fiscal sustainability, macroeconomic stability, and the appropriate conduct of monetary and fiscal policy to the forefront of policy debates worldwide. This five-lecture course investigates the mechanisms and conditions under which...

Dovish Coos or Hawkish Screech? From Central Bank Talk to Economic Walk

This paper investigates the effectiveness of the European Central Bank’s (ECB) communication in shaping market expectations and real economic outcomes. Using a transformer-based large language model (LLM) fine-tuned to ECB communication, the tone of monetary policy statements from 2003 to 2025 is classified, constructing a novel ECB Communication Stance Indicator. This indicator contains forward-looking ...

For a Strategic, European and Competition-Oriented Industrial Policy

The competitiveness of German industry is under significant pressure. While politiciansacknowledge the need for change, their proposed solutions remain vague and lack a clearstrategic direction. Current approaches focus on tax relief, broad investment subsidies fordomestic firms or targeted cost reductions, such as lower electricity prices. While thesemeasures may improve production conditions, they ...

Who benefits from economic growth?: The Macroeconomics Department at DIW Berlin

[English subtitles, German language video] The Macroeconomics Department at DIW Berlin investigates who benefits from economic growth and how economic changes affect different groups. The team analyzes current developments, assesses economic shocks, and provides sound forecasts. Through its work, the department supports policymakers and society in better identifying risks and opportunities and...

The Aggregate Labor Share and Distortions in China

This paper shows that in an economy where distortions prevent firms from using their profit-maximizing amounts of capital and labor, removing these distortions can generate both an efficiency gain and a higher aggregate labor share. We use firm-level data on Chinese manufacturing, mining, and public utilities in 2005 and estimate a general equilibrium model with heterogeneous productivity, technology, ...

Use It or Lose It: How Cognitive Skills Change with Age

Committed to Flexible Fiscal Rules

We study the implications of fiscal rules for macroeconomic stabilization when countries are hit by adverse exogenous shocks. Exploiting the unpredictability of natural disasters, we document that economies with a fiscal rule absorb these shocks better than those without: the responses of GDP and private demand are significantly higher. This difference is coupled with more expansionary fiscal policy ...

Lifting Women Up: Gender Quotas and the Advancement of Women on Corporate Boards

Research Question/Issue: The introduction of gender quotas on corporate boards can disrupt the status quo, resulting in externalities that affect women's advancement within the company. This study investigates whether boardroom quotas contribute to promoting women further up the corporate ladder and facilitate access to a broader spectrum of positions. Research Findings/Insights: Using legislative ...

Use It or Lose It: How Cognitive Skills Change with Age

Support for Everyone or Selection of Some? Self-Selection and Assignment Into a Large-Scale Refugee Mentoring Program in Germany

Mentoring has become a popular support strategy for recently arrived immigrants and refugees, offering access to valuable information and resources. However, little is known about selection processes into mentoring programs—who chooses to enrol, who receives support, and whether these patterns are systematic. Such selection affects not only program evaluations but also broader issues of refugee integration ...