In this study we investigate the impact of the thin capitalization rule (TCR), introduced in Germany in 2008, on firms' capital structure, investment and profitability. The identification of the causal effects is based on the escape clauses in the regulation using a difference-in-difference approach. Our results present evidence that firms strongly react in order to avoid the limited deductibility ...
The recent extensive package introduced by the Commission is the "most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic and Monetary Union. Broader and enhanced surveillance of fiscal policies, but also macroeconomic policies and structural reforms are sought in the light of the shortcomings of the existing legislation. New enforcement ...
Women remain grossly underrepresented in management positions in Germany. However, what has been dubbed the gender leadership gap, i.e., the difference between the share of all employees who are women and the share of women in senior management positions, varies considerably across different industries. The present report shows that the largest gender gap in the likelihood of holding a senior management ...
A key challenge for economic policy today is to make the financial system more resilient. The literature finds that high indebtedness (or: leverage), both in the financial and in the real sectors, is a danger to macroeconomic stability and growth. Moreover, the design of the corporate tax system is an important determinant of leverage: in many countries interest paid on debt is tax-deductible while ...
After the outbreak of the global financial crisis, some governments in the EU experienced serious fiscal problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data ...
This paper studies the reaction of the Euro's value against major currencies to sovereign rating announcements from Moody's, S&P and Fitch CRAs during the Eurozone debt crisis in 2010–2012 based on event study methodology combined with GARCH models. We also analyze how the yields of French, Italian, German and Spanish government long-term bonds were affected by CRA announcements. Our results reveal ...
This paper proposes a simultaneous-equation approach to theestimation of the contribution of infrastructure accumulationto private production. A political economy model for theallocation of public infrastructure investment grants isformulated. Our empirical findings, using a panel of largeGerman cities for the years 1980,1986, and 1988, suggest thatcities ruled by a council sharing the State (`Bundesland')government's ...
