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DIW Economic outlook: German economy not picking up speed for the time being

DIW Berlin Economic Outlook: German Economy Stuck in Limbo While Trade Conflicts Threaten the Global Economy

The German economy is stuck in a difficult position as it faces both slow growth as well as structural change. The continuing lack of orders in manufacturing, increasing international competition, and sluggish development in industry-related services are now affecting the labor market and leading not only to short-time work but to layoffs too, despite the continuing skilled worker shortage. While GDP ...

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

Recent proposals for a European deposit insurance scheme (EDIS) favor a reinsurance framework. In this paper, we use a regime-switching open economy DSGE model with bank defaults 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 that risk-weighted contributions ...

Sovereign Haircuts: 200 Years of Creditor Losses

We study sovereign external debt crises over the past 200 years, with a focus on creditor losses, or “haircuts.” Our sample covers 327 sovereign debt restructurings with external private creditors over 205 default spells since 1815. Creditor losses vary widely (from none to 100%), but the statistical distribution has remained remarkably stable over two centuries, with an average haircut of around 45 ...

Kids or No Kids? Life Goals in One’s 20s Predict Midlife Trajectories of Well-Being

For many people, parenthood constitutes a crucial part of a successful life. Yet, the number of adults who never have children is increasing and has prompted concerns about their well-being. Past research mostly focused on parents and rarely investigated factors that are theoretically meaningful for the well-being of adults without children. Our preregistered study uses a propensity-score matched design ...

A Retrospective Study of State Aid Control in the German Broadband Market

We provide an evaluation of the impact of German public subsidy schemes in municipalities of Bavaria and Lower Saxony aimed at supporting the deployment of basic broadband infrastructure in rural Germany. Such subsidies are subject to state aid control by the European Commission and may only be granted if the potential market failure is addressed without distorting competition. We first analyse the ...

The Wave 1 Scientific Use File of the German Social Cohesion Panel (SCP) is now available!

The SCP is a longitudinal study that captures multiple aspects of social cohesion in Germany. It is based on a representative population sample drawn from the German population registers and was carried out for the first time in 2021. The annual survey is directed not only at the selected individuals but also at all other adult household members. The SCP is funded by the Federal Ministry of Education ...

Equilibrium Effects of Payroll Tax Reductions and Optimal Policy Design

We quantify the unintended effects of a low-wage payroll tax reduction using an equilibrium search model featuring bargaining, worker and firm productivity heterogeneity, labor taxes, and a minimum wage. The decentralized economy is inefficient due to search externalities and labor market policies. We estimate the model using French data and find that a significant reduction in low-wage payroll taxes ...

The Wave 1 Scientific Use File of the German Social Cohesion Panel (SCP) is now available!

The SCP is a longitudinal study that captures multiple aspects of social cohesion in Germany. It is based on a representative population sample drawn from the German population registers and was carried out for the first time in 2021. The annual survey is directed not only at the selected individuals but also at all other adult household members. The SCP is funded by the Federal Ministry of Education ...

The Well-Being Costs of Informal Caregiving

How does informal care affect caregivers’ well-being? Theories and existing research provide conflicting answers to this question, partly because the temporal processes and conditions under which different aspects of well-being are affected are unknown. Here, we used longitudinal data from Dutch, German, and Australian representative panels (281,884 observations, 28,663 caregivers) to examine theoretically ...