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DIW Discussion Papers 1999 / 2022
In 2020, Berlin introduced a rigorous rent-control policy responding to soaring rents by setting a cap on rental prices: the Mietendeckel (rent freeze). The policy was revoked one year later by the German Constitutional Court. Although successful in reducing rents during its duration, the consequences for Berlin’s rental market and adjacent municipalities are not clear. In this paper we evaluate the ...
2022| Anja M. Hahn, Konstantin A. Kholodilin, Sofie R. Waltl, Marco Fongoni
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DIW Discussion Papers 1997 / 2022
Housing affordability is a hotly debated issue on global scale. A lack of affordable housing of decent quality is a chronic problem in urban areas. Governments try to alleviate it by stimulating homeownership among middle-income households and providing social housing for the low-income households. Such policies are very costly. Thus, this study aims to assess at least tentatively the effectiveness ...
2022| Eugeniya Malinskaya, Konstantin A. Kholodilin
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DIW Discussion Papers 1995 / 2022
We develop a New Keynesian model with household heterogeneity and bounded rationality in the form of cognitive discounting. The interaction of household heterogeneity and bounded rationality generates amplification of monetary and fiscal policy through indirect general equilibrium effects while simultaneously ruling out the forward guidance puzzle and remaining stable at the effective lower bound. ...
2022| Oliver Pfäuti, Fabian Seyrich
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DIW Discussion Papers 1993 / 2022
This paper studies external sovereign bonds as an asset class. It compiles a new database of 266,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering up to 91 countries. The main insight is that, as in equity markets, the returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ...
2022| Josefin Meyer, Carmen M. Reinhart, Christoph Trebesch
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DIW Discussion Papers 1992 / 2022
We investigate how internal distribution motives can interfere with the economic objectives of capital controls. In order to do this, we provide a model showing that elite capture can affect optimal debt repatriations and the management of official reserves under capital controls. Relying on these theoretical insights and a wealth of quantitative and qualitative historical evidence, we study one of ...
2022| Andrea Papadia, Claudio A. Schioppa
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DIW Discussion Papers 1990 / 2022
Negative interest rates remain a controversial policy for central banks. We study a novel signalling channel and ask under what conditions negative rates should exist in an optimal policymaker’s toolkit. We prove two necessary conditions for the optimality of negative rates: a time-consistent policy setting and a preference for policy smoothing. These conditions allow negative rates to signal policy ...
2022| Oliver de Groot, Alexander Haas
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DIW Discussion Papers 1984 / 2021
We examine whether the financial strength of companies, in particular, small and medium-sized enterprises (SMEs) is causally linked to the award of a public procurement contract (PP), especially in the environmentally friendly “green” area (GPP). For this purpose, we build a combined procurement company data set from the Tenders Electronic Daily (TED) and the SME database AMADEUS, which includes ten ...
2021| Christopher F. Baum, Arash Kordestani, Dorothea Schäfer, Andreas Stephan
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DIW Discussion Papers 1981 / 2021
This paper investigates the impact of natural disasters on price stability in the euro area. We estimate panel and country-specific structural vector autoregression (VAR) models by combining estimated damages of disaster events with monthly data for the Harmonised Index of Consumer Prices (HICP) for all euro area countries over the period 1996-2021. Besides estimating the effect on overall headline ...
2021| John Beirne, Yannis Dafermos, Alexander Kriwoluzky, Nuobu Renzhi, Ulrich Volz, Jana Wittich
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DIW Discussion Papers 1972 / 2021
Welfare is traditionally understood through social security decommodifying labor markets or social investment policies. In the domain of housing, however, welfare for homeowners is largely hidden in the tax codes’ fiscal exemptions. Based on a content analysis of legislation, this paper introduces a novel yearly database of 37 countries between 1910 and 2020 to uncover the “hidden welfare state” of ...
2021| Konstantin A. Kholodilin, Sebastian Kohl, Artem Korzhenevych, Linus Pfeiffer
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DIW Discussion Papers 1967 / 2021
Conditional on a contractionary monetary policy shock, the labor share of value added is expected to decrease in the basic New Keynesian model. By providing firm-level evidence, we are first to validate this proposition. Using local projections and high dimensional fixed effects, we show that a one standard deviation contractionary monetary policy shock decreases firms' labor share by 0.4 percent, ...
2021| Jan Philipp Fritsche, Lea Steininger