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Low Base Interest Rates: An Opportunity in the Euro Debt Crisis

by Marius Kokert, Dorothea Schäfer, Andreas Stephan in: DIW Economic Bulletin 5/2014Member states of the euro area have been struggling with the legacies of the severe financial and economic crisis for four years now. But debt ratios are still rising. Negative primary balances, low growth, and low inflation do not allow for a recovery similar to the one in the US after the Second World War. Between ...

The ECB’s Policy of Low Interest Rates Is Indispensable for Now: Five Questions to Dorothea Schäfer

in: DIW Economic Bulletin 5/2014The ECB’s Policy of Low Interest Rates Is Indispensable for Now: Five Questions to Dorothea Schäfer

Low Base Interest Rates: An Opportunity in the Euro Debt Crisis

Member states of the euro area have been struggling with the legacies of the severe financial and economic crisis for four years now. But debt ratios are still rising. Negative primary balances, low growth, and low inflation do not allow for a recovery similar to the one in the US after the Second World War. Between 1946 and 1953, the US was able to almost halve its debt with no haircuts. The crisis ...

The ECB’s Policy of Low Interest Rates Is Indispensable for Now: Five Questions to Dorothea Schäfer

Weak Inflation and Threat of Deflation in the Euro Area: Limits of Conventional Monetary Policy

Inflation in the euro area has been below the European Central Bank's target for almost a year now and it is also expected to remain at a very low level in the near future. On the one hand, such a low level of inflation is not in line with the ECB's objective. On the other hand, there is the risk that this situation will lead to a slide into deflation. In view of the ECB's historically low policy rates, ...

Macht Ungerechtigkeit krank? Gesundheitliche Folgen von Einkommens(un)gerechtigkeit

Theoretical research on inequity and social justice as well as experimental research indicate that perceived injustice may cause stress and thus may have negative effects on health. Using longitudinal data from the German Socio-Economic Panel (SOEP) of the years 2005 to 2011, this study investigates if perceptions of earnings (un)fairness impact employees’ health. The analyses show that a change in ...

The German Part-Time Wage Gap: Bad News for Men

Despite the increasing incidence of part-time employment in Germany, the effects on wage rates are studied rarely. I therefore use SOEP panel data from 1984 to 2010 and apply different econometric approaches and definitions of part-time work to measure the socalled part-time wage gap of both, men and women in East and West Germany. A very robust finding is that part-time working men are subject to ...

Making the Euro Area Fit for the Future

The crisis in the European currency area is not over yet. Although the situation in the financial markets is currently relatively calm, the economic crisis appears to be bottoming out in most countries. Nevertheless, fundamental design flaws in the Monetary Union continue to exist. If these are not fully addressed, it will only be a matter of time before a new crisis hits, and a partial or complete ...

Who Is Overeducated and Why? Probit and Dynamic Mixed Multinomial Logit Analyses of Vertical Mismatch in East and West Germany

Overeducation is an often overlooked facet of untapped human resources. But who is overeducated and why? Relying on SOEP data 1984‐2011, we use probit models for estimating the likelihood of entering overeducation and dynamic mixed multinomial logit models with random effects addressing state dependence and unobserved heterogeneity. As further robustness checks we use three specifications of the target ...

Intense Excitement until the Final Whistle - FIFA World Cup Winner More Difficult to Predict this Time Around

At the FIFA World Cup 2006, the method of using the market value of the teams ("transfer value") was first proposed as a simple and transparent basis for forecasting the outcome of a major football tournament. Indeed, the countries with players of the highest market value were world champions in 2006 and 2010 (Italy and Spain, respectively), just as the most expensive team won the European ...