We study the effects of movements in aggregate lending standards on macroeconomic aggregates and inequality. We show in a New Keynesian model with heterogeneous households and housing that a looser loan-to-value (LTV) ratio stimulates housing demand, nondurable consumption, and output. Our model implies that the LTV shock transmits to macroeconomic aggregates through higher household liquidity and ...
The sentiment among refugees in Germany has changed significantly: Using Socio-Economic Panel (SOEP) data from 2016 to 2023, it can be seen that refugees have been feeling increasingly unwelcome since 2018, while their concerns about xenophobia have grown since 2019. In addition, cross-sectional data from 2022 refugees’ subjective experiences of discrimination in the workplace and when searching for ...
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 ...
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 ...
[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...
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, ...
