PROGRAM

1 2 TH R G SDOCTORALCONFERENCE

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ECO NOMICS

RUHR-UNIVERSITY BOCHUM

19-20FEBRUARY 2019

CONFERENCE LOCATION

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MAP OF THE RUHR UNIVERSITÄT BOCHUM

MENSA LEVEL 04VERANSTALTUNGSZENTRUM

UNDERGROUND STATION U 35 Ruhr-Universität

VERANSTALTUNGS- ZENTRUM

MENSA LEVEL 01

12 TH DOCTORAL

CONFERENCE IN ECONOMICS

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WELCOME 6 – 7

RGS ECON 9 - 11

ORGANIZERS & COMMITTEES 13 – 15

GENERAL INFORMATION 17 – 21

SPECIAL EVENTS AND KEYNOTE SPEECHES 23 - 27

CONFERENCE PROGRAM 29 - 31

ABSTRACTS 33 – 87

LIST OF PRESENTERS 89– 93

NOTES 94 - 95

CONTENT

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DEAR PARTICIPANTS,

It is our pleasure to welcome you to the “12th RGS Doctoral Conference”. We are excited about the high-quality contributions to this year’s conference program and honored that you are joining us - to present your work and discuss your research with other doctoral students.

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Prof. Dr. Christoph M. Schmidt, PhD,

Director RGS Econ

Prof. Dr. Ludger Linnemann,

Director RGS Econ

The conference is organized annually by the Ruhr Graduate School in Economics (RGS Econ), rotating locations between those of RGS Econ’s initiators; Bochum, Duisburg, Dortmund, and Essen. It serves as a plat-form for young talented economists – just like you – to engage in fruitful discussions, to learn and share knowledge, to build networks, and, ideally, to initiate joint research projects. RGS Econ’s faculty members, who will chair the sessions, are also more than happy to discuss research ideas and give comments. Engage!

As a particular highlight, the conference features a keynote lecture by a highly prominent researcher. This year we are proud to present Professor Dr. Christian Bayer, chair for macroeconomics at the University of Bonn, who will give a presentation on the topic “Income Risk, Financial Frictions, and Aggregate Fluctuations”.

And true to the Ruhr Valley Region, we traditionally organize a tour to one of the region’s sights. This year, we will visit the German Mining Museum in Bochum.

We have striven to create the best circumstances for a highly productive time here in Bochum. We hope that the conference persistently contrib-utes to the advancement of economic research and research-based policy advice, through dialogue and mutual understanding, by bringing togeth-er early-career researchers and prospective leaders from across Europe and the world. Comments and suggestions for improvement are highly welcome.

Kind regards,

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RGS ECON IS PROUDLY SPONSORED BY, AMONG OTHERS

RGS ECON IS MANAGED BY RWI – LEIBNIZ INSTITUTE FOR ECONOMIC RESEARCH

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The Ruhr Graduate School in Economics (RGS Econ) provides internationally competitive research-oriented doctoral training in eco-nomics in the form of a 3-year structured program. It combines and builds on exper-tise of the three economics departments of the University Al-liance Ruhr (TU Dortmund University, University of Duisburg- Essen, and Ruhr-University Bochum), as well as one of Germa-ny’s leading economic research institutes, the RWI – Leib-niz-Institute for Economic Research.

RGS Econ funds around eight excellent entering doctoral students per year with a three-year scholarship or teaching and research assistant positions. Advanced course-work, appropriate guidance, a cooperative learning environment, and an extensive research network and infrastructure are geared to support our students in conducting first-rate research and our graduates in obtaining excellent positions in academia, in research and policy institu-tions, and in the private sector.

The program covers all major areas of economics, from theory to em-pirical validation, and from policy design to its evaluation. Faculty mem-bers of the RGS Econ group themselves into three major research clusters listed below. Interactions and cooperation within and across clusters are intense; doctoral students are invited to contribute to these exchanges by following their own interests.

CLUSTER 1: Applied Microeconometrics, Labour, Population, and Health Economics

CLUSTER 2: Macroeconomics, Monetary and International Economics, Financial Markets, Econometrics

CLUSTER 3: Microeconomics, Game Theory, Mechanism Design, Public Finance

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ORGANIZERSAND

COMMITTEES

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This event would not have been possible without the time and effort of:

SCIENTIFIC COMMITTEEProf. Dr. Erwin Amann (University of Duisburg-Essen)

Prof. Dr. Thomas Bauer (Ruhr-University Bochum & RWI)

Prof. Dr. Ronald Bachmann (HHU Düsseldorf & RWI)

Prof. Dr. Ansgar Belke (University of Duisburg-Essen)

Prof. Dr. Matthias Busse (Ruhr-University Bochum)

Prof. Dr. Volker Clausen (University of Duisburg-Essen)

Dr. Markus Fels (TU Dortmund University)

Prof. Dr. Manuel Frondel (Ruhr-University Bochum & RWI)

Prof. Dr. Vasyl Golosnoy (Ruhr-University Bochum)

Prof. Dr. Christoph Hanck (University of Duisburg-Essen)

Prof. Dr. Christiane Hellmanzik (TU Dortmund University)

Jun.-Prof. Dr. Martin Thomas Hibbeln (University of Duisburg-Essen)

Dr. Yannick Hoga (University of Duisburg-Essen)

Prof. Dr. Carsten Jentsch (TU Dortmund University)

Prof. Dr. Philip Jung (TU Dortmund University)

Prof. Martin Karlsson, Ph.D. (University of Duisburg-Essen)

Prof. Dr. Rüdiger Kiesel (University of Duisburg-Essen)

Prof. Dr. Eugen Kovac (University of Duisburg-Essen)

Prof. Dr. Kornelius Kraft (TU Dortmund University)

Jun.-Prof. Dr. Sanne Kruse-Becher (University of Duisburg-Essen)

Prof. Dr. Wolfgang Leininger (TU Dortmund University)

Prof. Dr. Ludger Linnemann (TU Dortmund University)

Jun.-Prof. Dr. Lars Metzger (TU Dortmund University)

Jun.-Prof. Dr. Marie Paul (University of Duisburg-Essen)

Prof. Dr. Peter N. Posch (TU Dortmund University)

Dr. Edgar Preugschat (TU Dortmund University)

Prof. Dr. Nadine Riedel (Ruhr-University Bochum)

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Prof. Dr. Julio R. Robledo (Ruhr-University Bochum)

Prof. Dr. Michael Roos (Ruhr-University Bochum)

Prof. Dr. Marianne Saam (Ruhr-University Bochum)

Prof. Dr. Christoph M. Schmidt (Ruhr-University Bochum & RWI)

Prof. Dr. Reinhold Schnabel (University of Duisburg-Essen)

Prof. Dr. Tobias Seidel (University of Duisburg-Essen)

Prof. Dr. Colin Vance (Jacobs University Bremen & RWI)

Prof. Dr. Ansgar Wübker (Ruhr-University Bochum & RWI)

Jun.-Prof. Dr. Lilia Zhurakhovska (University of Duisburg-Essen)

Jun.-Prof. Dr. Florian Ziel (University of Duisburg-Essen)

CONFERENCE ORGANIZATIONProf. Dr. Ludger Linnemann (TU Dortmund University)

Prof. Dr. Christoph M. Schmidt (Ruhr University Bochum & RWI)

Helge Braun, PhD (RGS Econ)

Jenny Neumann (RGS Econ & RWI)

Raphael Becker (RGS Econ)

GRAPHICS & DESIGNDaniela Schwindt (RWI)

ORGANIZERS AND

COMMITTEES

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GENE RAL

IN FOR

MATION

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GENERALINFORMATION

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CONFERENCE VENUERuhr Universität Bochum Veranstaltungszentrum (VZ) Universitätsstr. 150

44801 Bochum

HOW TO GET TO THE CONFERENCE?The closest airport is Düsseldorf International (DUS), where you can take the train to Bochum Hauptbahnhof. Once you arrived, you can take the tram U35 towards Bochum Hustadt. Exit the train at Ruhr Universität.

You will leave the platform via the stairs and turn right. Now you are walk-ing towards the University. Follow the map towards the Mensa, where the Veranstaltungszentrum (VZ) is also located.

A map of the conference venue is provided on the inside cover of this booklet.

REGISTRATION AND INFORMATION DESKThe registration and information desk for the conference is located in the foyer of the Veranstaltungszentrum.

On Tuesday, February 19, it is staffed from 7:45 – 18:00.

On Wednesday, February 20, it is staffed from 8:00 – 17:00.

CANTEEN (MENSA)In order to receive the reduced price for students at the university can-teen/mensa, conference attendees will need to show their student ID (from their home university) to the cashier. The canteen/mensa is located in the same building (Level 02) as the conference and can be reached in less than five minutes.

SMOKING POLICYSmoking is strictly prohibited inside all university buildings. Smoking is only permitted outside the buildings.

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INTERNET ACCESSFree wireless internet access is available throughout the conference ven-ue.

The name and access code of the wireless network is available at the in-formation desk.

CONTACT IN CASE OF URGENT MATTERSHelge Braun helge.braun@rgs-econ.de +49 (0)1 76 32 92 88 40

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SPECIAL EVENTS

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KEYNOTE SPEECH

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MONDAY, FEBRUARY 18

GET-TOGETHER19:00

For those arriving early, we will meet for a get-together at local restau-rant. We hope that you can join us there and meet your fellow conference attendees.“SAUSALITOS” is located in the middle of the most popular pub district in the Ruhr area called “Bermuda3Eck”. More than 60 pubs at-tract about four million guests per year. “SAUSALITOS” is well known for a large variety of cocktails, beers, and other drinks. Furthermore, they serve burgers and Mexican food for a decent price. Please note that food and drinks are not covered at this event.

Sausalitos, Kortumstraße 13, 44787 Bochumwww.sausalitos.de/nc/mein-sausalitos/bochum/

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TUESDAY, FEBRUARY 19

OPENING REMARKS (SAAL 1)08:30 - 8:45

Prof. Dr. Ludger Linnemann (TU Dortmund),

greetings by Prof. Dr. Axel Schölmerich, Rector Ruhr Universität Bochum

TOUR OF “DEUTSCHES BERGBAUMUSEUM“ - AN EXHIBITION OF A COAL MINE13:00 - 16:00

As the social event of this year’s conference, we will visit the Deutsches Bergbau-Museum for a guided tour of the visitors’ mine, 20 meters below the surface. For over two hundred years, the Ruhr Area was the heart of German coal and steel manufacturing and the mining industry is a form-ative factor of the region. With its unique range of displays, exhibits and machinery, and a particular emphasis on the historical development and on social, cultural and economic aspects, the museum has established it-self as one of the world’s leading centers for research into mining history. Original machinery, tools and working models give an insight into an envi-ronment that would otherwise remain inaccessible to the general public: the underground world of mining.

IMPORTANTThe tour of the Deutsches Bergbau-Museum is in English and free of charge for

conference participants, i.e. presenters and guest speakers. A bus transfer is or-

ganized. The bus will leave at 13:30 in front of the University building. We will meet

in the foyer of the Veranstaltungszentrum at 13:00 and walk together to the bus.

Prior registration is necessary as space is limited.

CONFERENCE DINNER17:45 Foyer, Veranstaltungszentrum

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WEDNESDAY, FEBRUARY 20

KEYNOTE SPEECH BY PROF. DR. CHRISTIAN BAYER (UNIVERSITY OF BONN)13:00 - 14:30

“INCOME RISK, FINANCIAL FRICTIONS, AND AGGREGATE FLUCTUATIONS”

The talk will discuss recent advances in modeling economies with incomplete financial markets, nominal frictions, and aggregate and idiosyncratic risks. It will cover both, the technical aspects of model ing and solution techniques, as well as the economic implications that arise from the asset demand implications of the financial frictions. As households seek to insure against the economic risks they face with a limited set of available assets, financial frictions alter substantially the transmission of aggregate economic shocks and changes in income risk find their repercussions in aggregate fluctuations.

About the Speaker Christian Bayer obtained his doctoral de-gree from TU Dortmund in 2004. After holding positions at the European University Institute in Florence and at Bocconi University in Milan, he became full professor at the University of Bonn in 2008. His research has been sponsored by two ERC grants. His work focuses on macroeconomics with heterogeneous agents. In particular, he has worked on the macroeconomic implications of financial frictions and uncertainty on investment, firm dynamics and household savings decisions. His work has been published in leading economics journals, e.g. in the American Economic Review, Econometrica, and the Journal of Monetary Economics.

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BEST PAPER AWARD AND CLOSING REMARKS Prof. Dr. Christoph Hanck, University of Duisburg-Essen

16:00 - 16:30

The conference ends February 20th, 16:30.

IMPORTANT

On February 20nd, starting at 16:30, we will offer sandwiches until 17:15 in the Veranstaltungszentrum, also for take-out.

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CONFERENCEPROGRAM

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FEBRUARY 18, MONDAY

19:00 Get-together Sausalitos

FEBRUARY 19, TUESDAY

07:45–08:30 Registration Foyer, VZ

08:30–08:45 Opening Remarks, Prof. Dr. Ludger Linnemannwith greetings by Prof. Dr. Axel Schölmerich, Rector, Ruhr-Universität Bochum

Saal 1

08:45–10:15 Macroeconomics IMicro Theory ILabor Economics IFinance I

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

10:15–10:30 Coffee Break Foyer, VZ

10:30–12:00 Macroeconomics IIHealth Economics IApplied Econometrics IMicro Theory II

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

12:00–13:00 Lunch Mensa

13:00–16:00 Deutsches Bergbaumuseum Meeting VZ

16:00–16:15 Coffee Break Foyer, VZ

16:15–17:45 Growth I Energy and Resource EconomicsMacroeconomics IIIIndustrial Organization

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

17:45 - 20:15 Conference Dinner, Foyer, VZ

CONFERENCE PROGRAM

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FEBRUARY 20, WEDNESDAY

8:30–10:00 Macroeconomics IVFirm BehaviorApplied Econometrics IIEconometrics I

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

10:00–10:30 Coffee Break Foyer VZ

10:30–12:00 Macroeconomics VFinance IITrade and InfrastructureExperimental and Behavioral Economics

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

12:00–13:00 Lunch Mensa

13:00–14:15 Keynote Speech, Prof. Dr. Christian Bayer„Income Risk, Financial Frictions, and Aggregate Fluctuations“

Saal 1

14:15–14:30 Coffee Break Foyer VZ

14:30–16:00 Labor Economics IIEconometrics IIHealth Economics IIGrowth II

Saal 1 Tagungsraum 1Tagungsraum 2Tagungsraum 3

16:00–16:45 Best Paper Award and Closing RemarksProf. Dr. Christoph Hanck

Saal 1

16:30–17:15 Early Dinner, also take-out, Foyer, Veranstaltungszentrum

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ABSTRACTS

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TUESDAY FEBRUARY 19, 2019

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SESSION 1

MACROECONOMICS I

08:45 - 10:15 SAAL 1CHAIR: PROF. DR. LUDGER LINNEMANN

1 MACROPRUDENTIAL POLICY AND DURABLE GOODS

Joao Vasco Gama (Universidade NOVA de Lisboa)

Housing prices are a key component of Fisher’s debt deflation chan-nel behind financial crises. It is therefore essential for a welfare-based quantitative evaluation of macroprudential policy to account for housing, here modeled as durable goods. This work introduces dura-ble goods into a quantitative non-linear model of financial crises designed to study how news shocks about future fundamentals and regime changes in global liquidity affect the design and effectiveness of optimal macroprudential policy. Results show that the introduction of durables increases the pecuniary externality in general. Surpris-ingly, there are settings where the introduction of durables dampens Fisher’s debt deflation amplification mechanism. Furthermore, the role of fundamentals news and the global liquidity regime is signifi-cantly strengthened by the introduction of durables.

2 THE SIGNALLING CHANNEL OF NEGATIVE INTEREST RATES

Oliver de Groot and Alexander Haas (Humboldt University of Berlin and DIW Berlin)

Negative interest rates have become an additional policy tool for sev-eral central banks in recent years, while others kept interest rates in positive territory, despite need for monetary accommodation. This paper explores a novel signalling channel through which negative interest rates on reserves can be expansionary, even when deposit rates are bounded by zero. We build a financial friction new-Keynesian model in which banks hold interest bearing reserves. All else equal, negative interest rates contract bank net worth and increase credit

TUESDAY FEBRUARY 19, 2019

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spreads. However, with policy inertia, negative interest rates signal lower future deposit rates even when current deposit rates remain bounded by zero, boosting aggregate demand and raising bank prof-its. In addition, we prove that the necessary conditions for negative interest rates to be part of an optimal policy maker’s policy toolkit are i) time-consistency policy setting and ii) an intrinsic preference for policy smoothing.

3 THE MACROECONOMIC EFFECTIVENESS OF BANK BAIL-INS

Matthijs Katz (University of Groningen) and Christiaan van der Kwaak

We examine the macroeconomic implications of bailing-in banks’ cred-itors after a systemic financial crisis, whereby bank debt is partially written off. We do so within a RBC model that features an endogenous leverage constraint which limits the size of banks’ balance sheets by the amount of bank net worth. Our simulations show that an unan-ticipated bail-in effectively ameliorates macroeconomic conditions as more net worth relaxes leverage constraints, which allows an expan-sion of investment. In contrast, an anticipated bail-in will be priced in ex-ante by bank creditors, thereby transferring the bail-in gains from banks to creditors. Therefore the intervention has zero impact on the macroeconomy relative to the no bail-in case. The effectiveness of the bail-in policy can be restored by implementing a temporary tax on

debt outflows once creditors start to anticipate a bail-in.

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SESSION 2

MICRO THEORY I

08:45 – 10:15TAGUNGSRAUM 1CHAIR: DR. MARKUS FELS

1 THE EFFECTS OF FAKE NEWS ON CANDIDATE SELECTION AND ON THE POLARIZATION OF POLITICAL ATTITUDES

Andreas Grunewald, Andreas Klümper (University of Bonn) and Matthias Kräkel

We study how fake news during a democratic election affects the qual-ity of candidate selection and the polarization of political attitudes if a fraction of the electorate suffers from correlation neglect. In our setting, the electorate observes multiple correlated signals about the competences of two political candidates. By producing costly fake news, the candidates can distort the signals in their favor. We show that the effect of fake news on candidate selection is ambiguous. Fake news will impede the selection of suitable candidates if the impact of correlation neglect is weak, but might improve candidate selection otherwise. However, we also show that fake news always aggravates the variance in the voters’ political attitudes. Hence, any improvement in candidate selection necessarily comes at the cost of a more polar-ized electorate.

2 PRICE TRANSPARENCY AGAINST MARKET POWER

Felix Montag (University of Munich) and Christoph Winter

Mandatory price disclosure can reduce market power caused by infor-mational frictions, but in markets prone to collusion can also harm consumers. This paper studies under what conditions policy-makers should mandate price disclosure. First, we set up a theoretical search model with collusion and imperfectly informed consumers and pro-ducers and characterise under which circumstances increasing price transparency benefits consumers. Second, we construct a unique data set to study how mandatory price disclosure in the German petrol mar-

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ket affected retail margins. We find that this policy led to a decrease in retail margins by about 15 percent. This effect is robust to different identification strategies and persistent over time. We contrast these results to existing empirical results in the literature and find that the level of price transparency prior to the intervention and the strength of the intervention determine its effect. Finally, we identify further heterogeneities in the treatment effect and deduce under what condi-tions policy-makers should consider mandating price disclosure.

3 TAX COMPETITION WITH LIMITED PROFIT SHIFTING

Simon Skipka (European University Institute)

This paper discusses the interaction between tax competition and the intensity of profit shifting, taking into account heterogeneity between countries and across firms. The research is motivated by recent pol-icies like the OECD’s modified Nexus-approach, which explicitly allow for a limited amount of profit shifting in the economy. The official argument to allow for some profit shifting is production efficiency. The ability to shift profits increases the independence of production and taxation and so, decreases the tax-based distortion in the firms’ deci-sion on the international allocation of production. The results of my model identify a counteracting country-strategic mechanism. In fact, decreasing the scope for profit shifting increases the incentives for high productive countries to compete for mobile tax revenues and so, has the potential to raise the average productivity of global produc-tion. In a second set of results, my model provides a different ration-ale for the emergence of policies with a limited allowance of profit shifting, based on the distribution of marginal profits across firms of different mobility. In order to gain from profit shifting, a firm needs to have: (i) a drop in production efficiency from investing in low tax des-tinations (ii) a significant share of production in low tax destinations. Highly mobile firms fail on condition (i), immobile firms on condition (ii). My model shows that marginal profits from allowing for a limited degree of profit shifting are heavily concentrated on firms with inter-mediate mobility. Thus, by the theory of lobbying, the policies are a breeding ground for lobbying activities by this subset of firms.

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SESSION 3

LABOR ECONOMICS I

08:45 – 10:15TAGUNGSRAUM 2CHAIR: HELGE BRAUN, PHD

1 THE CHINA SHOCK, EMPLOYMENT PROTECTION, AND EUROPEAN JOBS

Hedieh Aghelmaleki (Heinrich-Heine University), Ronald Bach-mann and Joel Stiebale

We investigate the effects of Chinese import competition on transi-tions into and out of employment using comparable worker-level data for 20 European countries. Our results show that, on average, Chi-nese imports were associated with a higher probability of employed workers to become unemployed. In addition, Chinese imports reduced worker flows from unemployment to employment, especially in coun-tries with high EPL. Furthermore, the effects of increased Chinese imports differ by worker groups and the tasks performed on the job. Instrumental variable techniques exploiting cross-industry variation in import shares before China’s entry into the WTO indicate that the rela-tionship between Chinese imports and worker flows is causal.

2 MIGRATION AND REMITTANCES AS RISK COPING STRATEGY AFTER NATURAL DISASTERS: RURAL BANGLADESHI HOUSEHOLDS’ RESPONSE TO FLOOD SHOCK

Eugenia Canessa (University of Florence and University of Tren-to)

Using georeferenced data for mapping the strong flood that hit Bang-ladesh in August-September 2014, the paper aims at evaluating how rural households have coped with the consequences of this natural shocks. Employing panel households for the period before and after the shock, we estimate the impact of flooding, proxied by the share of inundated areas for each village where sampled households live, on different income, consumption and migration outcomes. Experiencing

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an average decrease in income of around 60 percent and a conse-quent drop in expenditures of 30 percent with respect to pre-shock period, affected households show an increasing emigration rate after the flood, as well as an higher probability to receive remittances. In addition, while internal migration incidence is similar across house-holds with different levels of initial incomes, the likelihood to have migrants overseas is constrained by their differences in availability of initial assets. However, results show that migration, and in particu-lar international migration, represents an insurance in case of natural disaster also for lower income households; among them in fact those that have relatives abroad are proven to better differentiate risk com-pensating more effectively for the income shock through monetary transfers received.

3 THE IMPACT OF LABOUR MARKET DISCRIMINATION ON WELFARE DEPENDENCY OF SECOND GENERATION IMMIGRANTS IN THE UK

Armine Ghazaryan (University of Southampton)

Many studies show that immigrants tend to claim more benefits than natives, even when accounting for their individual characteristics. This paper suggests and tests the hypothesis that the tendency of immi-grants to claim more benefits is linked to income discrimination in the labour market.

This study uses panel data from Understanding Society, a UK house-hold longitudinal survey, to look at second generation immigrants in comparison to UK natives. By estimating labour market discrimination against immigrants using available methodology on income decom-position, the paper then uses the estimates of discrimination to study whether labour market discrimination affects welfare dependency of immigrants. This paper shows that immigrants’ likelihood to move into state welfare dependency increases when there is discrimination in the labour market. The results differ for EU versus non-EU second generation immigrants.

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SESSION 4

FINANCE I

08:45 – 10:15TAGUNGSRAUM 3CHAIR: PROF. DR. PETER POSCH

1 ANALYZING THE NONLINEAR PRICING OF LIQUIDITY RISK ACCORDING TO THE MARKET STATE

Helena Chulia, Christoph Koser (University of Barcelona), and Jorge M. Uribe

This study examines the asymmetric pricing of systemic liquidity risk in asset pricing, by employing conditional quantile functions onto a liquidity-adjusted three factor model. We find that the exposure of returns to aggregate liquidity risk depends on the market state. There exists a positive premium for systemic liquidity when the market is in a good state. We also find that systemic liquidity risk is negatively priced if the market is in a bad state. During normal times, market-wide liquid-ity risk is rarely priced, addressing the necessity to examine up- and downside liquidity risk in the first place.

2 STRUCTURAL CHANGE IN THE LINK BETWEEN OIL AND THE EUROPEAN STOCK MARKET: IMPLICATIONS FOR RISK MANAGEMENT

Javier Ojea Ferreiro (Complutense University of Madrid and ECB)

The relationship between the European stock market and the crude oil depends on the significance of the different industries in the European economy. The literature points to a structural change after the 2008 crisis without getting into details of which sectors lead this regime switch. The co-movement between oil prices and stock market is known to exhibit (1) non-linearity, (2) asymmetric tail dependence and (3) variation over time. I combine a copula approach with Switching Markov models to capture this complex linkage while the CoVaR meas-ure translates the consequences of the tail dependence into potential losses. The results indicate a change in the lower tail dependence from negative to positive association between oil and Eurostoxx, meaning

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a shift in the exposure of our stock portfolio to commodity risk. There is a structural change in dependence after the 2008 financial crisis led by energy-intensive sector, e.g. basic materials and consumer goods. The economic cycle and its implications for profit margin and oil demand might explain this switch. Healthcare sector responds to oil shocks in an opposite way than Eurostoxx, displaying useful features to reduce the exposure of the stock portfolio to oil spillovers.

3 BANK AS A VENTURE CAPITALIST

Kumar Rishabh (University of Basel)

Traditional banks finance entrepreneurs through loans. But more ingenious banks explore other forms of financing, such as venture capital (VC), as well. In this paper, I argue that the banks offer VC together with traditional (collateralized) loans in response to the nat-ural constraints of asymmetric information that they face. Innovative entrepreneurs pursue new technology that promises a high return but runs a high risk of failure. The more innovative entrepreneurs also have higher reservation utility. This interaction between type depend-ent returns and reservation utility creates a situation where collateral alone is not sufficient to screen entrepreneurs and the bank needs an additional screening device. VC fulfils that role. I also introduce a fairly general returns function that can generate various risk–expected returns relations, including a risk-expected returns trade-off.

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SESSION 5

MACROECONOMICS II

10:30 - 12:00SAAL 1CHAIR: PROF. DR. PHILIP JUNG

1 EFFECTS OF A EUROPEAN UNEMPLOYMENT INSURANCE

Zeno Enders and David A. Vespermann (Heidelberg University)

The recent euro crisis highlighted flaws in the design of the monetary union. As a reaction, policy makers have proposed the introduction of a European unemployment benefit scheme (EUBS). In this paper we assess to which degree such a scheme would provide the macro-economic stabilization that was lost due to the elimination of flexi-ble exchange rates. Specifically, we use a rich DSGE model, calibrated to Germany and the rest of the euro area, to analyze the changing dynamics and altered risk sharing that a EUBS brings about. We find that following supply shocks, a EUBS can bring consumption closer to the paths under flexible exchange rates. The transfer, however, is spent to a large degree on relatively inefficient production in the receiving countries, requiring a high labor input. Hours worked hence become more volatile due to the inefficient distribution of factor inputs across countries. After demand shocks, unemployment responses are rela-tively similar, due to the common monetary policy. The transfer does therefore not change the responses significantly.

2 RUSH HOURS AND URBANIZATION

Tobias Seidel and Jan Wickerath (University of Duisburg-Essen and RGS Econ)

We use a general equilibrium model with potential commuting of work-ers between their place of work and their place of residence to ana-lyze the effects of rush hours on the spatial allocation of employment and population, average labor productivity and the housing market. Abolishing traffic congestion during rush hours leads to a more urban-ized economy as households move from the low-density countryside

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to the commuter belts of cities rather than from the city centers to the periphery. Employment, however, becomes more agglomerated in high-density large cities. This adjustment implies an increase of aver-age labor productivity of 5.4 percent while the overall inequality in the distribution of housing costs declines.

3 THE OPTIMAL CONSUMPTION CHOICE UNDER LIMITED ATTENTION

Penghui Yin (Goethe University Frankfurt)

This paper studies consumption-saving choice and information acqui-sition behavior of heterogeneous agents who have only limited atten-tion to process information regarding future capital return. The heterogeneity in our model comes from the inequality of the initial endowment. We analytically solve the model and find that (i) the opti-mal saving rate is decreasing over the amount of attention devoted to future capital income risk, (ii) wealthier households pay less attention to future capital income risk, and (iii) this model provides a new chan-nel to explain why wealthier households save at a higher rate.

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SESSION 6

HEALTH ECONOMICS I

10:30 - 12:00TAGUNGSRAUM 1CHAIR: PROF. MARTIN KARLSSON, PHD

1 ASSESSING REPORTING HETEROGENEITY WITH VISUAL ANALOGUE SCALE (VAS): AN APPLICATION TO QUALITY OF LIFE

Zhiyong Huang and Fabrice Kämpfen (University of Lausanne)

In this study, we propose several methods to account for reporting heterogeneity in self-reported Visual Analogue Scale (VAS) meas-ures using anchoring vignettes. While the Hierarchical Ordered Probit (HOPIT) models are commonly used to adjust for reporting heteroge-neity in self-reported Likert scale measures, continuous VAS measures enable us to explore a much richer set of econometric models such as linear fixed-effect models and linear double-index models. We also design models that relax the cardinality assumption that is implied in linear specifications and propose models that account for reporting heterogeneity in VAS measures by developing ordered response mod-els for which only ordinality is assumed. The generalized ordered pro-bit model and HOPIT models we propose allow us to identify the fac-tors that determine reporting heterogeneity and enable us to quantify the magnitude of these factors in unit of measurements. We then test our econometric models and their underlying assumptions on a sam-ple of students whom we have asked to evaluate their quality of life. In line with previous studies, females report having higher quality of life than males. However, when accounting for reporting heterogeneity, females appear to be worse-off in terms of quality of life compared to their male counterparts. This may indicate that the findings of previ-ous studies showing the positive association between being a female and quality of life might be entirely driven by reporting heterogeneity.

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2 LONG-RUN COSTS OF INFORMAL ELDERLY CARE AND IMPLICATIONS OF LONG-TERM CARE INSURANCE

Thorben Korfhage (RWI)

Informal caregivers provide valuable services to elderly persons with long-term care needs. Yet, they are confronted with opportunity costs due to negative effects of caregiving on labor marked outcomes, such as employment or retirement. These costs can be even larger if infor-mal care also affects future outcomes. After a care spell has ended, individuals who have reduced labor supply before could be confronted with a lower job offer probability and stay unemployed or retire early because they cannot find a new job. To mitigate these negative effects, many OECD countries have introduced long-term care insur-ance schemes that offer benefits to impaired elderly and their infor-mal caregivers. In this paper, I estimate a structural dynamic discrete choice model to identify long-run outcomes and how they are affected by different features of a public long-term care insurance. Simulation results show that informal care has adverse and persistent effects on labor supply and therefore also affects lifetime earnings and pension benefits. Personal costs of caregiving are heterogeneous and depend on age, previous earnings and largely on institutional regulations. Even though fiscally costly, compulsory long-term care insurance can offset the personal costs of caregiving to a large extent.

3 WHAT DETERMINES PERCEIVED INCOME JUSTICE? EVIDENCE FROM THE GERMAN TWINLIFE STUDY

Michael Neugart and Selen Yildirim (TU Darmstadt)

Whether individuals perceive their income as being fair has far reach-ing consequences in the labor market and beyond. Yet we know little on the determinants of variation in perceived income justice across individuals. In this paper we ask whether genes can explain parts of the variation. Analyzing dara from the German TwinLife study, we find that more than 30% in individuals’ perceived income justice can be attributed to genetic variation. The rest is mostly driven by idiosyn-cratic environmental effects. We, furthermore, do not find evidence for gene-environment interaction effects.

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SESSION 7

APPLIED ECONOMETRICS I

10:30 - 12:00TAGUNGSRAUM 2CHAIR: PROF. CHRISTIANE HELLMANZIK, PHD

1 FINANCIAL LITERACY AND SOCIALIST EDUCATION: LESSONS FROM THE GERMAN REUNIFICATION

Maddalena Davoli (Goethe University Frankfurt) and Jia Hou

A growing body of literature shows the importance of financial liter-acy in households’ financial decisions. However, fewer studies focus on understanding the determinants of financial literacy. Our paper fills this gap by analyzing a specific determinant, the educational system, to explain the heterogeneity in financial literacy scores across Ger-many. We suggest that the lower financial literacy observed in East Germany is partially caused by a different institutional framework experienced during the Cold War, more specifically, by the socialist educational system of the GDR which affected specific cohorts of indi-viduals. By exploiting the unique set-up of the German reunification, we identify education as a channel through which institutions and

financial literacy are related in the German context.

2 THE EFFECT OF CONFLICT ON EDUCATION: EVIDENCE FROM SIERRA LEONE

Tillman Hönig (London School of Economics and Political Sci-ence)

This study investigates the long-run effects of the civil war in Sierra Leone on education. Similar to the literature in other contexts, I exploit cohort and conflict variation within Sierra Leone from micro-level data in the spirit of a difference-in-difference (DID) design. Since schooling typically takes place at a particular age for people, using school age cohorts in such a way is a very natural method to esti-mate a plausibly causal effect of higher conflict intensity on the edu-

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cation of those affected by it. I find that a one standard deviation increase in conflict intensity led to a 0.3-0.5 year reduction in the amount of schooling for school aged children during the war by 2011, that is, ten years after the civil war ended. Some suggestive evidence on channels indicates that a major driver of this effect may be supply side factors.

3 DOES PUBLICATION LEAD TO PUBLICATION? THE EFFECT OF AUTHOR REPUTATION ON PUBLICATION SUCCESS

Oliver Rehbein (University of Bonn)

I test whether non-quality-related author reputation affects publica-tion success. I exploit the fact that post-publication journal reputation changes affect an author’s reputation exogenously. This quality-inde-pendent reputation change significantly increases the publication suc-cess of the next publication, without influencing citations. The effect of reputation increases with journal prestige and is particularly pro-nounced in general interest journals.

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SESSION 8

MICRO THEORY II

10:30 - 12:00TAGUNGSRAUM 3CHAIR: PROF. EUGEN KOVAC, PHD

1 RENT-SEEKING AND THE PROVISION OF CLUB GOODS

Friederike Blönnigen (TU Dortmund and RGS Econ)

In this paper, we analyze a club framework where relative participa-tion in club activities serves as a head start in a following contest. The effect on rent dissipation and club good provision is studied in a two-stage game. In the first stage, each club member chooses her activity level in the club to maximize the sum of utility from club membership and expected utility from contest participation. Club members and nonmembers enter one of K different contests in stage two in which they compete simultaneously to win a rent. Individual spending as well as the relative activity in the club determine the probability of receiv-ing the rent or a proportion of the rent allocated to each contestant. While former research states that free riders undermine the viabil-ity of a club and suggests high entry costs to internalize the positive externality, we find that a player’s activity level in the club increases due to the motivation of winning a contested rent in the second stage. Further, participation in club activities decreases inefficient rent dis-sipation in the following contest. If a club membership is relatively important or the amount of club members entering the same contest is small enough, contest investment is completely substituted by club activity.

2 DELEGATION TO A GROUP

Sebastian Fehrler and Moritz Janas (University of Konstanz)

We study the choice of a principal to either delegate a decision to a group of careerist experts, or to consult them individually and keep the decision power. The experts have access to information of dif-ferent, competence-dependent accuracy, at cost C ≥ 0, and benefit

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from being perceived as competent. Our model predicts a trade-off between information acquisition and information aggregation. On the one hand, the expected benefit from being informed is larger under individual consultancy, so the experts, depending on C, either acquire the same or a larger amount of information than under delegation. On the other hand, any acquired information is better aggregated under delegation, where experts can deliberate secretly. To test the key pre-dictions, we run an experiment, varying C across treatments. The results confirm the predicted trade-off. However, we find that many experts over-invest in information, which makes delegation even opti-mal where theory predicts better outcomes under individual consul-tancy. Nevertheless, the principals in our experiment are very reluc-tant to delegate.

3 DYNAMIC CONSISTENCY IN INCOMPLETE INFORMATION GAMES WITH MULTIPLE PRIORS

Marieke Pahlke (Bielefeld University)

This paper explores multi-stage incomplete information games with common ambiguous information about state or types and ambiguity averse players. We characterize a belief formation process that allows players to take their knowledge about the structure of the game into account. This process leads to subjective rectangular ex-ante belief sets for all players. We show that under these belief sets players behave dynamically consistent. Therefore, using our belief formation process, we can generalize the concept of Sequential Equilibria to multi-stage ambiguous incomplete information games and show exist-ence. Furthermore, we show that ambiguity can introduce Sequential Equilibria, that do not exist without ambiguity.

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SESSION 9

GROWTH I

16:15 - 17:45SAAL 1CHAIR: PROF. DR. MARIANNE SAAM

1 INNOVATION AND THE LABOR SHARE FOR A LATIN-AMERICAN MIDDLE INCOME COUNTRY

Elisa Failache (Universitat Autònoma de Barcelona)

On the one hand, innovation is considered as an important factor in order to promote the economic development of countries. On the other hand, the study of the labor share has gain attention again due to movements in the recent decades. This paper tries to analyze the effect of innovation in the labor share at the firm level for a middle-in-come country: Uruguay. In order to do this, I use a novel panel data-base that merges information about the innovation process of firms and the labor share for the period 2007-2012. In particular, I consider big firms of industrial and service sectors and estimate a pooled Ordi-nary Least Square regression and a Fixed Effects regression. The results show that there is a mild negative relationship between inno-vation and labor share caused fundamentally by the investment in the acquisition of capital goods.

2 ICT AND PRODUCTIVITY GROWTH WITHIN VALUE CHAINS

Chuan Liu (Ruhr-University Bochum) and Marianne Saam

To what extent have economies become better off because of the diffusion of information and communication technologies (ICT)? We analyze this question based on a growth accounting approach at the level of final output. The particularity of this approach is that it traces productivity improvements not within sectors but within value chains. This allows to better judge to what extent more or better products have become available to final users, in particular consumers, as a result of the diffusion of ICT. A main result is that more than half of the productivity gains related to ICT capital deepening are contributed

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by upstream industries, although the large part of this contribution is domestic rather than foreign. Further, the high sectoral TFP growth in the ICT sector contributes only moderately to growth in total fac-tor productivity in non-ICT value chains via the use of intermediates.

3 HUMAN CAPITAL AND THE EFFECT OF FOREIGN AID ON GROWTH

Andre Seepe (TU Dortmund and RGS Econ)

A widely discussed aspect of foreign aid is its significance in foster-ing economic growth of developing countries. The related literature has found foreign aid to be especially effective when associated with sound institutions in the recipient country. However, institutional qual-ity itself is likely to depend on human capital accumulation. Conse-quently the present paper asks if the interaction effect between for-eign aid and education affects economic growth significantly positive. It turns out that this is indeed the case and seems to be more robust than the interaction of foreign aid and education. This implicates that foreign aid disbursements should not be made conditional on the insti-tutional quality of the recipient country but rather be used to increase human capital to support economic development.

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SESSION 10

ENERGY AND RESOURCE ECONOMICS

16:15 - 17:45TAGUNGSRAUM 1CHAIR: PROF. DR. MANUEL FRONDEL

1 THE AMENDMENT OF THE EU ETS: DECOMPOSITION OF EFFECTS AND DYNAMIC EFFICIENCY

Johanna Bocklet (University of Cologne), Martin Hintermayer, Lukas Schmidt, and Theresa Wildgrube

With the increase of the linear reduction factor (LRF), the implemen-tation of the market stability reserve (MSR) and the introduction of the cancellation mechanism (CM), the EU ETS changed fundamentally. We develop a discrete time model of the intertemporal allowance mar-ket that accurately depicts these reforms. The results show that prices increase with the interest rate as long as the total number of allow-ances in circulation (TNAC) is positive. Once the TNAC is depleted, prices grow at a lower rate. With the CM, 5% of all allowances issued from 2018 onwards will be invalidated. Remaining allowances in the MSR are reinjected into the market between 2029 and 2036. A sensi-tivity analysis ensures the robustness of the model results regarding its input parameters. The accurate modelling of the EU ETS allows for a decomposition of the effects of the individual amendments and the evaluation of the dynamic efficiency. The MSR shifts emissions to the future but is allowances preserving. Since the MSR adds a constraint on banking and thus contradicts firms’ time preferences, it increases firms’ discounted abatement costs and deteriorates dynamic effi-ciency. The CM reduces the overall emission cap, increasing allowance prices in the long run, but does not significantly impact the emission path in the short run. Alternative cancellation designs, such as reduc-ing allowance supply on the long end, may outperform the current CM. The increased LRF leads with 9 billion allowances to a stronger reduc-tion than the CM and is, therefore, the main price driver of the reform.

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2 FEEDBACK PROVISION AND RESOURCE CONSERVATION: EVIDENCE FROM A FIELD STUDY IN STUDENT DORMS

Ximeng Fang (University of Bonn), Lorenz Goette, Bettina Rocken-bach, Matthias Sutter, and Verena Tiefenbeck

A large number of studies explores the potential of feedback provi-sion on household energy consumption for mitigating climate change. However, effects are often modest. We introduce a conceptual frame-work that illustrates how imperfect information and inattention can jointly prevent pro-environmental intentions from translating into conservation behavior. Importantly, a behavioral intervention may need to address all barriers simultaneously to unfold its full potential. We run a randomized field experiment on energy use in the shower (N = 351 student dorm residents) that combines real-time feedback tar-geted at inattention and home energy reports targeted at imperfect information. Home energy reports in isolation do not induce conser-vation despite significant learning effects, whereas real-time feedback in isolation leads to energy savings of around 13–18%. Adding home energy reports to live feedback enhances the savings effect by more than 50%, suggesting that inattention can hinder agents from acting

on knowledge gains.

3 DETERMINING THE DEMAND ELASTICITY IN A WHOLESALE ELECTRICITY MARKET

Sergei Kulakov (University of Duisburg-Essen) and Florian Ziel

The main focus of researchers in energy markets is typically placed on the analysis of the supply side. The demand side, despite its crit-ical importance, is a subject which still deserves a more profound academic investigation. In particular, the number of studies on the demand elasticity in a wholesale market is limited to merely several pieces. In this paper we extend this field of study and propose a new method for determining the demand elasticity. More specifically, we decompose the data observed in the wholesale market into individ-ual supply and demand schedules of the market participants. These schedules are then used to construct a fundamental model of the market. Our approach thus allows us to better understand the bidding behavior of the market participants and thus make more precise infer-ences about the functioning of the electricity market.

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SESSION 11

MACROECONOMICS III

16:15 - 17:45TAGUNGSRAUM 2CHAIR: PROF. DR. ANSGAR BELKE

1 MONETARY EFFECTS OF CENTRAL BANK DEBT

Fabio Canetg (University of Bern) and Daniel Kaufmann

This paper analyzes the monetary effects of central bank debt securi-ties in an environment with ample excess liquidity. We develop a model of the money market where commercial banks can invest excess reserves in interest-bearing central bank liabilities. Similar to inter-est on excess reserves (IOER) central bank debt securities reduce the cost of reserve holdings because they can be partly invested in debt securities. Both, a higher volume and a higher yield on central bank debt securities raise the money market rate. To empirically support the theoretical predictions we exploit that the Swiss National Bank auctioned debt certificates on pre-determined weekdays from 2008 to 2011. These auctions caused a strong and persistent appreciation of the Swiss franc and a decline in stock prices.

2 GOVERNMENT SPENDING AND RETAIL PRICES: EVIDENCE FROM THE AMERICAN RECOVERY AND REINVESTMENT ACT

Rasmus Bisgaard Larsen (University of Copenhagen)

I study the effects of government spending on retail prices using retail scanner data. State-level spending shocks are identified using geo-graphic variation in federal spending under the American Recovery and Reinvestment Act of 2009. $1,000 of government spending per capita cause an increase in retail prices of around 3 % over the fol-lowing two years relative to other states. I provide evidence that the price changes are not driven by changes in marginal costs. This sug-gests that retailers’ charge higher markups following an increase in government spending.

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3 DISENTANGLING THE INFORMATION AND FORWARD GUIDANCE EFFECT OF MONETARY POLICY ANNOUNCEMENTS ON THE ECONOMY

Lars Other (Friedrich Schiller University Jena)

Central bank announcements may comprise different information components. For example, an announcement of monetary easing may either be perceived as an expansive stimulus or, contrary, as a system-atic response by the central bank to unfavorable economic news the public is unaware of. This paper presents a novel strategy to decom-pose the information content of central bank announcements that explicitly accounts for such an information effect regarding economic prospects. Based on a formally derived prediction of the standard New Keynesian model, the identifying assumption reads that the informa-tion effect should be correlated with movements in five-year, five-year breakeven inflation rates on announcement days, while forward guidance regarding future interest rates should not be correlated. Disentangling distinct dimensions of monetary policy, the effects of monetary policy announcements on the term structure and on the macroeconomy are investigated. The results provide new insights about the transmission mechanism of monetary policy measures and highlight the effectiveness of forward guidance.

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SESSION 12

INDUSTRIAL ORGANIZATION I

16:15 - 17:45TAGUNGSRAUM 3CHAIR: PROF. DR. JULIO ROBLEDO

1 THE IMPACT OF PRODUCT QUALITIES ON DOWNSTREAM BUNDLING IN A DISTRIBUTION CHANNEL

Angelika Endres (Paderborn University) and Joachim Heinzel

We study the impact of exogenous product qualities on a downstream firm’s decision to bundle and the welfare effects of downstream bun-dling. For that, we consider a distribution channel with two down-stream firms and two monopolistic upstream producers. One upstream producer maintains an exclusivity contract with one downstream firm regarding good 1. The other upstream producer sells its good 2 to both downstream firms. Thus, there is a downstream duopoly for good 2 where the firms engage in price competition. The two-product down-stream firm has the option to sell its goods separately or as a prod-uct bundle. Our results illustrate that bundling is only more profita-ble than selling the goods separately for the two-product downstream firm when the quality of good 2 exceeds the quality of good 1. Further-more, profitable bundling decreases consumer surplus and social wel-fare. We additionally identify vertical externalities combined with hori-zontal externalities as factors reducing the bundling incentive.

2 INSIDE VERSUS OUTSIDE ADVICE IN TAKEOVERS

Marius Kulms (University of Bonn) and Paul Voß

We investigate a takeover game in which the optimal outcome is uncertain ex ante due to informational asymmetries. Both the incum-bent manager and the external bidder possess different pieces of information about the value of the takeover to society. After the bid-der has posted a tender offer the biased incumbent manager can send a cheap talk recommendation to the shareholders. We show how the

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manager’s recommendation can improve control allocation. The antic-ipation of the recommendation induces the bidder to fully reveal his type via his price offer. First-best management is put in charge for van-ishing bias. In addition, we prove that outside advisors who can trans-mit information of arbitrary precision reduce firm value compared to cheap talk by the inside manager with sufficiently small bias. Contrary to first-best, initial shareholders prefer a biased manager to increase their takeover premium. We derive implications for optimal manage-ment compensation, the market for fairness opinions and takeovers. Our model extends to more general problems, such as bilateral trade with an unknown outside option.

3 VAPORWARE IN A QUALITY DIFFERENTIATION MODEL WITH PREANNOUNCEMENT

Na Li (KU Leuven) and Patrick van Cayseele

Preannouncements allow computer producers to coordinate their product strategies, in particular the quality choices. This coordina-tion results in vaporware. We develop an extended duopoly model with preannouncements followed by a two-stage quality-price choice game. The results show that preannouncements help symmetric firms achieve asymmetric coordination, and improves the equilibrium pay-offs. In addition, software products are distinguished from hardware products, modeled as information goods with negligible marginal cost and a large development cost. Welfare analysis shows that consumer surplus typically decreases following preannouncements by hardware producers, while opposite results hold with software products as long as the lowest quality is over a fair level. Furthermore, we estimate the probability of success in coordination following preannouncements in these two situations. It shows that software producers are more likely to announce the highest quality in the preannouncement stage, lead-ing to a lower probability of success in coordination. When the mar-ginal cost of hardware products is low, the result of the comparison is arbitrary.

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SESSION 13

MACROECONOMICS IV

08:30 - 10:00SAAL 1CHAIR: PROF. DR. VOLKER CLAUSEN

1 POLICY UNCERTAINTY AND CURRENT ACCOUNT DYNAMICS

Hayk Kamalyan (Goethe University Frankfurt)

What is the response of the current account to heightened monetary policy uncertainty? This question is particularly important for devel-oping countries where policy uncertainty is substantially higher and time-varying. Estimation using Brazilian data shows that the cur-rent account improves by up to 0.2 percent of GDP following a one standard deviation increase in policy uncertainty. I present an open economy New-Keynesian model that can replicate this finding. In the model, an increase in policy volatility leads to an improvement in the current account, a decline in output, and an increase in inflation. The overall improvement in the current account is due to households’ pre-

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cautionary asset accumulation. In sticky-price DSGE models, policy volatility shocks often generate a comovement problem: output and inflation move in the opposite direction. For developed countries, the countercyclical movement of prices after uncertainty shocks is hard to reconcile with empirical observations. This paper shows that for developing countries this does not seem to be an issue. In Brazil, out-put and inflation move in the opposite direction after an increase in policy uncertainty.

2 PHILLIPS CURVES IN NOISY INFORMATION FORECASTS

Markus Kontny (University of Hohenheim)

This paper asks if the average professional forecaster in the U.S. has a Phillips curve in mind when reporting survey forecasts. I argue that a common approach in the literature, i.e. direct regressions of inflation forecasts on unemployment forecasts, does not necessarily identify forecasters’ `beliefs’ about the Phillips curve slope. The presence of stickiness in forecasters’ information set updating distorts estimates of their perceived slope coefficient. I provide an estimation framework based on noisy information to control for these frictions. First, I show that they do have a Phillips curve in mind and that it is time-varying and became flatter over the past decades. Second, I show that not controlling for the presence of information frictions in survey fore-casts of inflation and unemployment underestimates the perceived slope by up to 50%. Last, I explore the time-varying forces driving the perceived Phillips curve slope. Here I find that the perceived slope is negatively correlated with forecasters’ attention to new informa-tion on inflation, consistent with predictions of imperfect information models.

3 INTERNATIONAL MACRO-FINANCIAL LINKAGES MATTER: ESTIMATING FINANCE-ADJUSTED OUTPUT GAPS IN G7 COUNTRIES

Tino Berger and Julia Richter (University of Göttingen)

In this paper, we provide a measure of output gaps in G7 economies by considering the fact that financial variables as well as international cycles can help identifying a country’s business cycle. We combine a trend-cycle decomposition of macroeconomic and financial variables

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with a dynamic factor model to decompose the cyclical component in GDP according to several sources. By including financial variables into the output gap estimation, we acknowledge the fact that finan-cial markets affect the business cycle. The resulting output gap can differ considerably in the presence of large financial imbalances as compared to traditional approaches. The model specification allows us to separate a country’s output gap into international and country-spe-cific cycles and calculate their relative importance. As such, we are able to quantify the importance of financial variables for the size of the output gap and distinguish between international versus domes-tic drivers for a country’s business cycle. We find a sizable degree of comovement of macroeconomic and financial variables across G7 economies. More importantly, we show that financial variables, in par-ticular credit and house prices, explain a large share of the output gaps in G7 countries.

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SESSION 14

FIRM BEHAVIOR

08:30 - 10:00TAGUNGSRAUM 1CHAIR: DR. EDGAR PREUGSCHAT

1 THE EFFECT OF INNOVATION ON SURVIVAL DURING THE LIFE CYCLE OF THE FIRM

Tim Grünebaum (TU Dortmund)

Innovation is usually seen to support firm survival. Even though this finding is widely accepted, a sophisticated look at a crucial factor is lacking: age. I combine arguments from Schumpeterian growth the-ory and life cycle theory to derive a hypothesis of age determining this effect. I show for 48,000 German companies that the innovation premium on survival sets in only at later stages of the business life cycle as old firms are forced to reinvent themselves. Up to an age of around 20, more conventional strategies enhance entrepreneurial stability because firms need to establish internal processes and stand-ard product lines.

2 BUNDLING IN A DISTRIBUTION CHANNEL WITH RETAIL COMPETITION AND POWERFUL MANUFACTURERS

Joachim Heinzel (Paderborn University)

We analyze the incentives for retailer bundling and the welfare effects of retailer bundling in a distribution channel with two retailers and two goods produced by two monopolistic manufacturers. One of the retail-ers is a monopolist in one market but competes either in quantities or in prices with the other retailer in a second product market. The two-product retailer has the option to bundle his goods or to sell them separately. We observe that bundling aggravates the double margin-alization problem for the bundling retailer. Nevertheless, given retail price competition, bundling can be more profitable than selling the goods separately for the retailer as bundling greatly softens the retail competition. The ultimate outcomes depend on the manufacturers’

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marginal costs. Regarding the welfare effects we find that profitable bundling reduces consumer and producer surplus under retail price competition. Under quantity retail competition, however, bundling is in no case the retailer’s best strategy.

3 AGONY OF CHOICE - TRADING OFF STABILITY AND COMPETITION IN THE BANKING MARKETS

Michael Hellwig and Falk Hendrik Laser (TU Darmstadt and GSE-FM)

In this paper we build a structural model to conduct a merger sim-ulation in the banking markets. Looking at the Dutch retail banking market we simulate the demerger between ABN AMRO and Fortis between 2008 and 2010. The merger resulted from attempts to mit-igate the effects of the financial crisis. We construct a dataset using the DNB Household Survey, a representative survey database on the financial behavior of Dutch households, and online comparison web-sites for savings account characteristics. Our data allows us to identify consumer choice for savings accounts conditional on individual choice sets and product characteristics. We model the demand for savings accounts as discrete choice for differentiated products with random coefficients. On the supply side we assume Bertrand Nash competi-tion in a multiproduct oligopoly. We find that in the counterfactual sce-nario of the demerger, interest rates for ABN AMRO are between 3% and 9.9% higher between 2008 and 2010. For Fortis we predict 25.2% and 5.2% higher interest rates for 2008 and 2010 respectively and 7.7% lower interest rates in 2009. Our findings indicate at a trade of between financial stability and competition in the banking markets. To the best of our knowledge we are the first to apply merger simulation in the context of banking using disaggregated data.

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SESSION 15

APPLIED ECONOMETRICS II

08:30 - 10:00TAGUNGSRAUM 2CHAIR: HELGE BRAUN, PHD

1 INTERGENERATIONAL MOBILITY IN EDUCATION: ESTIMATES OF THE WORLDWIDE VARIATION

Tharcisio Leone (GIGA Hamburg)

The recent “Global Database on Intergenerational Mobility” offered us the first ever opportunity to compare intergenerational educational mobility on a global level. Sampling educational attainment of children and their parents from 148 countries, which corresponds to 96 per-cent of the world’s population, and using estimations from transition matrices and linear regression models this paper reported the varia-tion over time and place in the intergenerational educational mobil-ity. This study provided empirical evidence showing that the world-wide increase in the average educational attainment over the last five decades was accompanied by equally sharp reductions in inequality of schooling. However, the empirical results concerning the intergen-erational educational mobility highlighted some pessimistic findings: First, there are wide differences in educational opportunities and intergenerational mobility around the world; secondly, the intergen-erational transmission of privileges is particularly strong in the least developed countries; and finally, and perhaps most importantly, the persistence in schooling between parents and children has grown wildly since 1950 in the poorest countries of the world, increasing in this way the gap in mobility between poor and rich economies.

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2 THE ROLE OF FINANCIAL LITERACY AND MONEY EDUCATION ON WEALTH DECISIONS

Alessandro Bucciol, Martina Manfrè (University of Verona) and Marcella Veronesi

We investigate the impact of financial education on a wide range of wealth decisions using Dutch data from the DNB Household Survey and a recent identification strategy proposed by Lewbel (2012). We consider two indexes representative of basic and advanced financial literacy acquired when adults, and money education received from the family during adolescence. We find that advanced financial liter-acy positively affects owning financial and risky assets. In addition, we show that money education received from the family during adoles-cence is an important factor affecting wealth decisions when adults compared to financial literacy, in particular it has a negative effect on the propensity to invest in risky assets and holding debt. This sug-gests that both dimensions of financial education should be included in the analysis of drivers affecting wealth decisions. We also find evi-dence of a gender gap, with males’ wealth decisions more affected by higher levels of financial literacy. Our results highlight the importance of improving financial knowledge not only through proper educational programs when adults, but also in the family environment during ado-lescence, where teens can learn positive attitudes towards money that are maintained throughout their life.

3 THE POT RUSH: IS LEGALIZED MARIJUANA A POSITIVE LOCAL AMENITY?

Steven Stillman and Diego Zambiasi (University College Dublin)

This paper examines the amenity value of legalized marijuana by ana-lyzing the impact of marijuana legalization on migration to Colorado. Colorado is the pioneering state in this area having legalized med-ical marijuana in 2000 and recreational marijuana in 2012. We test whether potential migrants to Colorado view legalized marijuana as a positive or negative local amenity. We use the synthetic control meth-odology to examine in- and out-migration to/from Colorado versus migration to/from counterfactual versions of Colorado that have not legalized marijuana. We find strong evidence that potential migrants view legalized marijuana as a positive amenity with in-migration sig-nificantly higher in Colorado compared with synthetic- Colorado after the writing of the Ogden memo in 2009 that effectively allowed state laws already in place to be activated, and additionally after marijuana was legalized in 2013 for recreational use. When we employ permuta-

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tion methods to assess the statistical likelihood of our results given our sample, we find that Colorado is a clear and significant outlier. We find no evidence for changes in out-migration from Colorado suggest-ing that marijuana legalization did not change the equilibrium for indi-viduals already living in the state.

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SESSION 16

ECONOMETRICS I

08:30 - 10:00TAGUNGSRAUM 3CHAIR: PROF. DR. VASYL GOLOSNOY

1 OVERCONFIDENCE VERSUS ROUNDING IN SURVEY-BASED DENSITY FORECASTS

Alexander Glas (Heidelberg University) and Matthias Hartmann

Although survey-based point predictions have been found to outper-form successful forecasting models, corresponding variance forecasts are frequently diagnosed as heavily distorted. Forecasters who report inconspicuously low ex-ante variances often produce squared forecast errors that are much larger on average. In this paper, we document the novel stylized fact that this variance misalignment is related to the rounding behavior of survey participants. Discarding responses which are strongly rounded provides an easily implementable cor-rection that i) can be carried out in real time, i.e., before outcomes are observed, and ii) delivers a significantly improved match between ex-ante and ex-post forecast variances. According to our estimates, uncertainty about inflation, output growth and unemployment in the U.S. and the Euro area is higher after correcting for the rounding effect. The increase in the share of non-rounded responses in recent years also helps to understand the trajectory of survey-based average uncertainty during the years after the financial and sovereign debt crisis. Our findings are in line with assertions from the previous liter-ature regarding the connection between survey respondents’ round-ing behavior and their uncertainty about future macroeconomic out-comes.

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2 SEASONALITY IN CATASTROPHE BONDS

Markus Steffen Herrmann (University of Duisburg-Essen) and Martin Hibbeln

Catastrophe bonds are securities that transfer insurance risk from (re-)insurers to capital markets. Due to seasonality of catastrophe events, the spreads of catastrophe bonds fluctuate substantially within each year. Based on secondary market data from 507 cat bonds, we employ econometric panel data regression models to explain seasonality in spreads. We use arrival frequencies of qualifying events to construct measures of cat bond seasonality. 30% of all secondary market fluctu-ation can be explained through a single seasonality variable that cap-tures three effects: the fluctuating arrival frequency, the influence of the individual expected loss of each catastrophe bond and the increas-ing seasonal fluctuation when a catastrophe bond approaches its maturity. Additionally, we establish a method to deduct implicit arrival frequencies from observable secondary market spreads.

3. SHORT-TERM FORECASTING OF THE US UNEMPLOYMENT RATE

Benedikt Maas (University of Hamburg)

The aim of this paper is to asses, whether the use of Google search data is useful to forecast the US unemployment rate amongst more traditional predictor variables. The weekly Google index is derived from the keyword „jobs“ and is used in diffusion index variants together with the weekly number of initial claims and monthly esti-mated unobserved latent factors. The unemployment rate forecasts are obtained via MIDAS regression models, which respect the real fre-quencies of the predictor variables. The forecasts are conducted in real-time and are compared to benchmark models.

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SESSION 17

MACROECONOMICS V

10:30 - 12:00SAAL 1CHAIR: PROF. DR. LUDGER LINNEMANN

1 OPTIMAL INHERITANCE TAX DEDUCTIONS FOR MATURE FAMILY-OWNED FIRMS: THE ROLE OF HUMAN CAPITAL

Kevin Glück (TU Dortmund and RGS Econ)

Exploiting the German inheritance and gift tax statistic, I show that effective inheritance tax rates are considerably lower than statutory tax rates, which is a result of generous deductions for family-owned businesses. Horizontal equity is not achieved by this institutional framework. In a tractable model I rationalize the favorable tax treat-ment: Under incomplete capital markets, financing the tax burden may demand divestment and layoffs. Empirically, I find that tax bur-dens can often be paid using liquid assets inherited together with the business. Secondly, small and medium sized businesses (SMBs) can-not easily be sold to outside buyers due to asymmetric information about the firm’s true value. If a family-owned SMB is not managed by the family, it may be liquidized, causing considerable earnings losses for employees who have accumulated match-specific human capital. Deductions for business assets let firm heirs internalize these earn-ings losses and incentivize to continue the parent’s business. Quanti-tatively, I apply the model to German data. In my baseline calibration, the optimal tax rate for small businesses is 21.9 percentage points below the tax rate for non-business assets, while it is confiscatory for large firms. The optimal tax increases in the non-business inheritance tax rate and the reversibility of capital investments and decreases in the earnings losses of workers upon separation.

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2 THE MISALLOCATION CHANNEL OF MONETARY POLICY

Matthias Meier and Timo Reinelt (University of Mannheim)

While the effects of monetary policy shocks on macroeconomic aggregates are well-documented, surprisingly little is known about the aggregate TFP response. This paper establishes that contraction-ary monetary policy shocks lower aggregate TFP. Using firm-level data, we further show that capital misallocation increases. Quantita-tively, the increase in capital misallocation explains a large part of the TFP decline. Other transmission channels, including utilization and markups, explain little of the TFP decline. We argue that size-depend-ent financial frictions are key to understand the monetary transmis-sion channel. Consistent with this view, we find that a large part of the misallocation response is driven by an increase in misallocation across small firms.

3 RISK, INSIDE MONEY, AND THE REAL ECONOMY

Hugo van Buggenum (Tilburg University)

In modern economies a large fraction of the money stock is inside money, which is privately issued money backed by credit. Because of the frictions that money overcomes, doubts about risk associated with credit that backs inside money can affect aggregate outcomes and may call for policy intervention. This paper therefore considers a micro-founded model of risk, inside money and monetary exchange in which the risk characteristics of inside money are determined endog-enously. The presence of risky inside money reduces welfare but for unconventional reasons: rather than causing undesirable volatility in real allocations, the trading frictions that money overcomes are not reflected properly in the liquidity rents that issuers of money earn. Swapping risky inside money for risk-free forms of government debt improves welfare when the level of government debt is kept constant, but it is even better for welfare when the supply of government debt is increased.

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SESSION 18

FINANCE II

10:30 - 12:00TAGUNGSRAUM 1CHAIR: JPROF. DR. MARTIN THOMAS HIBBELN

1 COMBINATION OF TIME SERIES MODELS AND SURVEYS OF EXPERTS FOR PREDICTING MACROECONOMIC VARIABLES

Norbert Fay (Universität Greifswald)

Pure econometric forecasting models lack of important information in some cases, which can be taken into account by professional fore-casters. Examples for this type of information are unforeseen Events. In this paper, I try to find an optimal combination of econometric fore-casts and the predictions from a Survey of Professional Forecasters to improve aggregate forecasts. My focus is on the entire predictive density rather than only on point forecasts. To obtain density fore-casts from an econometric model, I combine several (time-varying) predictive regressions using different sets of theoretically motivated predictive variables. To accommodate model uncertainty, I combine the differently specified predictive regressions using Dynamic Model Averaging. The combination of econometric predictions and survey forecasts is achieved via an extension of a non-parametric method called Entropic Tilting. Using a data-adaptive procedure either the tilted predictive density or the baseline predictive density are chosen based on the forecasting performance in the recent past. I label this version of Entropic Tilting with enhanced flexibility Selective Entropic Tilting. An application for five major exchange rates show that fore-casting gains are achieved for constellations in which neither the fore-casts provided by the econometric model dominate the survey fore-casts nor vice versa.

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2 ELEPHANTS AND THE CROSS-SECTION OF EXPECTED RETURNS

Nora Laurinaityte (Goethe University Frankfurt), Christoph Mein-erding, Christian Schlag and Julian Thimme

Standard GMM cross-sectional asset pricing tests are susceptible to a trade-off: they can generate high explanatory power for factor mod-els by allowing the estimated factor means to substantially deviate from the observed sample average of the factor. In fact, by shifting the weights on the moment conditions that identify the factor mean, any desired level of cross-sectional fit can be attained. This property is a feature of the GMM estimation design and works for weak as well as strong factors, and for all sample sizes and test assets. To substantiate the trade-off, we run placebo tests based on simulated data with weak and strong factors. Finally, as an example of factor models proposed in the literature that are prone to the documented effect, we show that a central finding of Yogo (2006), namely that durable consumption growth risk is priced in the cross-section of expected stock returns, is spurious. To alleviate the concern that we raise, researchers who test cross-sectional models with GMM should always report both the cross-sectional fit and the estimated factor means.

3 ECONOMETRIC MODELLING AND FORECASTING OF INTRADAY ELECTRICITY PRICES

Michal Andrzej Narajewski (University of Duisburg-Essen) and Florian Ziel

In the following paper we analyse the ID3-Price on German Intra-day Continuous Electricity Market using an econometric time series model. A multivariate approach is conducted for hourly and quar-ter-hourly products separately. We estimate the model using lasso and elastic net techniques and perform an out-of-sample very short-term forecasting study. The model’s performance is compared with bench-mark models and is discussed in detail. Forecasting results provide new insights to the German Intraday Continuous Electricity Market regarding its efficiency and to the ID3-Price behaviour.

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SESSION 19

TRADE AND INFRASTRUCTURE

10:30 - 12:00TAGUNGSRAUM 2CHAIR: JPROF. DR. SANNE KRUSE-BECHER

1 THE IMPACT OF REGIONAL PRODUCTIVITY CHANGES AND TRANSPORT INFRASTRUCTURE IMPROVEMENTS: EVIDENCE FROM GERMANY

Raphael Becker (University of Duisburg-Essen and RGS Econ) and Marcel Henkel

We analyze the impact of regional productivity changes and trans-port infrastructure improvements on the aggregate economy. Using German data on input-output linkages and interregional trade, we identify the key regions for the aggregate economy. We find that the key regions differ significantly in terms of measured TFP, real GDP, and welfare elasticities. In counterfactual simulations we then ana-lyze the aggregate and disaggregate effects of changes in produc-tivity and transport infrastructure improvements between 2010 and 2015. We find that accounting for disaggregated changes in produc-tivity and transport infrastructure between 2010 and 2015 increases aggregate TFP by 4.61 percent, increases aggregate real GDP by 11.14 percent and increases welfare by 7.18 percent. A decomposition anal-ysis shows that the effect of infrastructure improvements is less pro-nounced. Shutting down changes in trade costs reduces aggregate GDP changes by 0.04 percentage points and welfare changes by 0.04 percentage points, respectively. A subsequent analysis shows that key regions - with the highest potential to affect aggregate output and welfare – experienced productivity losses and therefore dampened the increase of aggregate real GDP and welfare between 2010 and 2015.

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2 RECOVERING WITHIN - COUNTRY INCOME INEQUALITY FROM TRADE DATA

Dorothee Hillrichs (Tilburg University) and Gonzague Vannooren-berghe

This paper develops a method to measure the change in income ine-quality within a country based on the change in its import patterns. Based on a sample of countries for which high quality income and inequality data is available, we first identify goods which are typically more imported by more unequal and richer countries. The identifica-tion of inequality relies on the heterogeneous income elasticity of the different varieties of a good. A disproportionate increase in imports of highly income-elastic varieties reveals an increase in income dis-persion. Our method extends the data coverage across countries and over time.

3 LINKAGES OF ROAD INFRASTRUCTURE: IMPACT OF REHABILITATED ROADS ON ACCESS TO UTILITY SERVICES

Nina Pkhikidze (University of Bonn, Center for Development Research (ZEF))

Large-scale road infrastructure connects urban areas and improves accessibility to small peripheral settlements. Are improved roads lead-ing to an improvement in access of utility services? To answer this question, this paper studies several large scale road rehabilitation pro-jects in Georgia during the period of 2006-2015. The rehabilitation projects were designed to improve the connectivity of district centers to each other. As a side effect, a large number of peripheral settle-ments also appeared better connected, creating an interesting setting to study the impact of rehabilitated roads. To address the non-ran-dom selection of improved roads between the targeted district center nodes, I use an instrumental variable strategy based on the least cost path spinning tree network. After building a cost surface raster with remote sensing data, I applied the optimal route algorithm to con-struct the IV. The estimation results suggest that being better con-nected improved household accessibility to utility services like elec-tricity, water, gas, sewage, waste disposal, and Internet. In addition, I measure the probability of households having access and using the non-basic utility services like gas, sewage, waste disposal and Internet. The findings indicate that households closer to the rehabilitated roads are more likely to be using these non-basic utility services.

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SESSION 20

EXPERIMENTAL AND BEHAVIORAL ECONOMICS

10:30 - 12:00TAGUNGSRAUM 3CHAIR: JPROF. DR. LILIA ZHURAKHOVSKA

1 THE IMPACT OF DISTRIBUTION FACTORS ON GROUP SHARING: A REVEALED PREFERENCE ANALYSIS

Laurens Cherchye, Jenke De Keyser (KU Leuven), and Bram De Rock

We propose a revealed preference method that allows to incorpo-rate the impact of distribution factors on the within-group distribu-tion of income (i.e. the so-called sharing rule). We assume collectively rational group behavior and include additional constraints to capture the effect of certain distribution factors on the sharing rule. A distin-guishing feature of our method is that it does not impose functional form assumptions on preferences or any functional structure on the group interaction process. We apply our method to experimental data on consumption decisions made by dyads of children. This data set also contains background information, such as children’s height, ver-bal and non-verbal skills, which can be used as distribution factors. We use our method to identify upper and lower bounds on the sharing rule both with and without constraints regarding distribution factors. This application shows that the inclusion of distribution factors leads to a more informative empirical revealed preference analysis. Specifi-cally, we obtain tighter sharing rule bounds.

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2 20 YEARS OF EMOTIONS AND RISKY CHOICES IN THE LAB. A META-ANALYSIS

Matteo M. Marini (Universitat Jaume I & Università degli Studi dell’Insubria)

The paper is a meta-analysis of experimental studies dealing with the impact of incidental emotions on risky choices, so as to explain tra-ditional heterogeneity of outcomes in the field. After performing an advanced search in Google Scholar and filtering out studies that do not match a list of selection criteria, I include 16 manuscripts from which 46 observations are drawn at the treatment level. At this point, I code a set of moderator variables representing experimental proto-cols and calculate Cohen (1988)’s d effect size as dependent varia-ble of a weighted least squares (WLS) regression where larger stud-ies are given more weight. Among the results, which are robust to different techniques for computing standard errors, I find that emo-tions induce higher risk aversion when a multiple price list à la Holt and Laury (2002) is used in place of stated preferences methods, as well as in case the risk elicitation task is framed as an investment decision instead of an abstract choice. Given the variety of proce-dures employed in this type of experiments and in the absence of a tailor-made game to answer such research questions, I recommend faithful study replication as preferential path in order to investigate the influence of emotions on risky decision making and ensure com-parability.

3 CREAM SKIMMING BY HEALTH CARE PROVIDERS AND INEQUALITY IN HEALTH CARE ACCESS: EVIDENCE FROM A RANDOMIZED FIELD EXPERIMENT

Nicolas R. Ziebarth, Anna Werbeck (RWI and RGS Econ), and Ansgar Wübker

We show in a randomized field experiment that specialists cream-skim patients by their profitability. In the German two-tier system, reimbursement rates for both the publicly and privately insured are centrally determined and fixed but more than twice as high for the privately insured. In addition, the privately insured are on average healthier, have higher incomes, and their reimbursement is 100% fee-for-service. The same hypothetical patient called almost one thou-sand outpatient private practices in 36 representative German coun-ties and attempted to make appointments for allergy tests, hearing

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tests and gastroscopies. Each telephone call followed a specific pro-tocol where we randomized and explicitly stated the insurance status of the caller and called each practice twice in time intervals of at least two weeks. Our findings show, first, that privately insured patients are a statistically significant 10 percent more likely to being offered an appointment. Second, we find statistically significant differences in wait times, conditional on being offered an appointment: public insured patients had to wait more than twice as long, or 13 more week-days for an appointment. The findings provide randomized evidence from the field showing that specialists cream-skim patients based on expected profitability. This implies that systematic insurance-related differences in reimbursement rates lead to inequality in health care access

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SESSION 21

LABOR ECONOMICS II

14:30 - 16:00SAAL 1CHAIR: PROF. DR. RONALD BACHMANN

1 BIRTHPLACE DIVERSITY AND FIRM PERFORMANCE

Enzo Brox (University of Konstanz) and Tommy Krieger

We present a simple model suggesting that birthplace diversity has a hump-shaped effect on team performance. To test this prediction, we exploit self-collected data on the first division of German male soc-cer. Our data covers 7,650 matches and includes information on 3,450 players, originating from 100 countries. Results from OLS fixed effect regressions support the model prediction. We address endogeneity issues with an instrumentation approach that exploits injuries to cre-ate exogenous variation in teams’ composition. Our 2SLS estimates confirm that an intermediate level of birthplace diversity maximizes the performance of a team.

2 IMMIGRANT WAGE ASSIMILATION IN DENMARK: THE ROLE OF FIRMS

Andrei Gorshkov (Aarhus University)

The paper uses Danish linked employer-employee data to estimate the extent of labor market assimilation of different immigrant groups in Denmark and analyze mechanism underlying this process. AKM-style decomposition (Abowd et al., 1999) is performed to analyze the role of sorting to higher-paying firms (and occupations) in immigrant wage assimilation. The role of accounting for individual heterogeneity in analyzing assimilation profile and role of firms in it is assessed. I adapt decomposition method proposed by Card et al. (2016) to quantify the role of a firm wage structure effect - differential wage policies of a firm to depending of the duration of stay in Denmark.

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3 YOUNG, STRONG MIGRANT MEN, AND RIGHT-WING POPULISM: EVIDENCE FROM A QUASI-NATURAL EXPERIMENT

Adrian Mehic (Lund University)

Between the 2014 and 2018 Swedish parliamentary elections, the vote share of the anti-immigration Sweden Democrats increased signifi-cantly. To evaluate the possibility of a casual link between immigration and the anti-immigration vote, this paper uses data from a nation-wide policy experiment, under which refugees are allocated qua-si-randomly to every municipality in the country, creating exogenous variation in the number of refugees between municipalities. Overall, I find a positive and significant impact of immigration on the right-wing populist vote. In areas with strong anti-immigration sentiments during the 1990s refugee wave, the effect is magnified significantly. However, when considering immigration of a particular refugee group dominated by young men, the relationship is considerably weaker. I show that this is because immigration of young men has a balanc-ing effect on the right-wing populist vote among immigration-friendly voter groups.

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SESSION 22

ECONOMETRICS II

14:30 - 16:00TAGUNGSRAUM 1CHAIR: PROF. DR. CHRISTOPH HANCK

1 A GENERALIZED METHOD OF MOMENTS ESTIMATOR FOR STRUCTURAL VECTOR AUTOREGRESSIONS BASED ON HIGHER MOMENTS

Sascha A. Keweloh (TU Dortmund and RGS Econ)

I propose a generalized method of moments estimator for structural vector autoregressions with non-Gaussian shocks. The shocks are identified by exploiting information contained in higher moments of the data. Extending the standard identification approach, which relies on the shocks’ covariance, to the shocks’ coskewness and cokurto-sis allows to identify the simultaneous interaction without any fur-ther restrictions. I analyze the estimator’s performance depending on the co-moments used for identification and the shocks’ degree of non-Gaussianity. Using the coskewness for identification already yields reliable estimates in small samples with mildly skewed shocks while using the cokurtosis requires a large excess kurtosis and a large sample. Finally, the estimator is used in an empirical application to analyze the simultaneous interaction between oil and stock prices.

2 RELIABLE REAL-TIME OUTPUT GAP ESTIMATES BASED ON A MODIFIED HAMILTON FILTER

Josefine Quast (Friedrich Schiller University Jena) and Maik H. Wolters

We propose a simple modification of the time series filter by Hamil-ton (2018b) that yields reliable and economically meaningful real-time output gap estimates. The original filter relies on 8-quarter-ahead forecasts errors of an autoregression. While this approach yields a cyclical component of GDP that is hardly revised with new incoming data due to the one-sided filtering approach, it does not cover typi-cal business cycle frequencies evenly, but short business cycles are

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muted and medium length business cycles are amplified. Further, the estimated trend is as volatile as GDP and can thus hardly be inter-preted as potential GDP. A simple modification that is based on the mean of 4- to 12-quarter-ahead forecast errors shares the favorable real-time properties of the Hamilton filter, but leads to a much bet-ter coverage of typical business cycle frequencies and a smooth esti-mated trend. Based on output growth and inflation forecasts and a comparison to revised output gap estimates from policy institutions, we find that real-time output gaps based on the modified Hamilton fil-ter are economically much more meaningful measures of the business cycles than those based on other simple statistical trend-cycle decom-position techniques such as the HP or the Bandpass filter.

3 REVISIONS TO POTENTIAL OUTPUT ESTIMATES IN THE EU AFTER THE GREAT RECESSION

Jonas Dovern and Christopher Zuber (Heidelberg University)

Potential output (PO) estimates were substantially revised downwards for EU countries after the Great Recession. Using real-time data pub-lished by the European Commission, we decompose PO revisions into revisions to the capital stock, trend labor input, and trend TFP. Down-ward revisions are very heterogeneous across countries but substan-tial and persistent on average. We show that capital revisions account for 40 % of the PO revisions for 2012; trend labor input and trend TFP account for 32 % and 28 %. On average, revisions are made within one year after the start of the crisis. TFP revisions lead, on average, revisions to the capital stock and trend labor input by six months. Our results suggest that one could improve the method to estimate PO.

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SESSION 23

HEALTH ECONOMICS II

14:30 - 16:00TAGUNGSRAUM 2CHAIR: PROF. DR. ANSGAR WÜBKER

1 CLIMATE, DISEASE & DEVELOPMENT: MALARIA CONTROL AND HISTORICAL AGRICULTURAL PRODUCTIVITY IN THE US

Maurizio Malpede (Catholic and Bicocca University)

This study provides an estimation of the causal relationship between reduction in malaria transmission and agricultural productivity in the U.S. by exploiting geographic variations in endemicity of malaria and using historical disaggregated county data for the U.S. together with a robust quasi-experimental approach. The two principal chan-nels through which malaria control policies could affect agriculture i.e. conversion of wetland to arable land and higher farmer productiv-ity due to better health conditions are also investigated. Results show that while the eradication of malaria led to approximately one fifth of the agricultural productivity growth in the U.S. counties, the positive effect was entirely due to better health conditions, since wetland con-version had little or no effect on the amount of arable land in highly endemic counties. Robustness checks from geographic variations in malaria endemicity within neighboring counties along with placebo treatments reinforce the positive effect of malaria eradication on his-torical growth rates of agricultural productivity.

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2 THE HETEROGENEOUS IMPACT OF SUGAR TAXES ON COLA DEMAND ACROSS DIFFERENT HOUSEHOLD TYPES

Valerio Serse (Université catholique de Louvain)

Sugar taxes are often considered as a possible tool to tackle excessive sugar consumption. Accounting for heterogeneity in preferences can be fundamental in order to assess whether these policies will be effec-tive among the targeted population. This work estimates a multinomial Logit model of cola demand on a large set of consumer scanner data in order to test for both taste heterogeneity and state dependence in product choice. The model estimates allow evaluating the effective-ness of taxation in reducing demand for sugary colas. The results indi-cates that households have very heterogeneous preferences for sug-ary colas, have different price sensitivity and exhibit inertia in cola choice. In particular, heavy sugar consumers tend to prefer sugary to diet colas but are less sensitive to prices. This suggests that although taxing sugary colas can be justified on public health grounds, this pol-icy will not have a larger impact among the targeted population. Tax policy simulations indicate that excise taxes targeting sugar content should be preferred to ad-valorem taxes on sugary colas, as the lat-ter would entail a larger substitution towards cheaper sugary colas. Lastly, because of state dependence in cola choices, these taxes are more effective in reducing cola demand in the long-run.

3 THE EFFECTS OF CRIME ON INDIVIDUALS LABOR MARKET OUTCOMES, AN EMPIRICAL ANALYSIS FROM MEXICO

Victor Zapata (Bielefeld Graduate School of Economics and Man-agement)

While, most of the literature, studying the Mexico’s drug related vio-lence, focus either on explaining the causes behind the dramatic increase in the homicide rate or analyzing the effect of crime on aggregated economic variables. This paper studies the effect of increasing violence over individual’s labor market outcomes in Mexico, using microeconometric analysis. By combining rich individual level data that enables to compare the labor market outcomes for the same worker before and during high levels of violence in Mexico.

This paper finds an heterogenous effect of increasing violence over

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the labor outcomes of individuals in high and low income groups, rather than by gender. The surge in the Mexico homicide rate, rep-resent a negative shock for lowincome individuals, since they are affected in a greater extent by violence than individuals in the high-in-come group, sharpening problems of inequality and poverty for peo-ple living in municipalities where the violence have escalated. Moreo-ver, we find evidence to argue that whereas, for workers in Agriculture and personal services occupations the effect of heightened violence have caused a decline in their income, for workers in occupations related to safety and security staff the probability of being employed and the number of hours worked weekly have increased. These find-ings are robust to taking into account the endogeneity of violence, by using geographical and drug supply in Mexico as identifying instru-ments. Moreover, the results expressed in this study are also robust after controlling for endogenous migration within our sample.

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SESSION 24

GROWTH II

14:30 - 16:00TAGUNGSRAUM 3CHAIR: PROF. DR. MARIANNE SAAM

1 HOW TO ACCELERATE GREEN TECHNOLOGY DIFFUSION? AN AGENT-BASED APPROACH TO DIRECTED TECHNOLOGICAL CHANGE WITH COEVOLVING ABSORPTIVE CAPACITY

Kerstin Hötte (Bielefeld University and Paris-1 Sorbonne Pan-théon)

The window of opportunity for effective climate change mitigation is closing. Hence, it is decisive to understand how to accelerate the diffu-sion of climate friendly technologies. Path dependence of technolog-ical change is an explanation for sluggish diffusion even if a technol-ogy is superior in the long run. This paper studies the determinants of diffusion, learning and the coevolution of innovation and absorptive capacity of heterogeneous firms. Technology differs by type (green or brown). Firms choose between types when acquiring capital goods and build up type-specific technological know-how that is needed to exploit the productive potential of capital. Path dependence arises from cumulative knowledge stocks manifested in the productivity of supplied capital and firms’ capabilities. Increasing returns in knowl-edge accumulation arise from positive feedbacks of market induced innovation and learning by doing. Lower knowledge stocks of entrant technologies represent a barrier to diffusion. This paper studies how these mechanisms explain path dependence and emerging simulated and empirical macroeconomic patterns of technology diffusion. I show how the effectiveness of different climate policies depends on the type and strength of diffusion barriers using an extended version of the macroeconomic agent-based model Eurace@unibi. Environmental taxes can outweigh a lower productivity and subsidies perform bet-ter if lacking capabilities hinder firms to adopt a sufficiently mature technology.

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2 AN ELEMENTARY THEORY OF DIRECTED TECHNICAL CHANGE AND WAGE INEQUALITY

Jonas Loebbing (University of Cologne)

This paper generalizes central results from the theory of (endoge-nously) directed technical change to settings where technology does not take a labor-augmenting form and with arbitrarily many levels of skill. Building on simple notions of complementarity, the results remain intuitive despite their generality. The developed theory allows to study the endogenous determination of labor-replacing, that is, automation technology through the lens of directed technical change theory. In an assignment model with a continuum of differentially skilled workers and capital, where capital takes the form of machines that perfectly substitute for labor in the production of tasks, any increase in the rel-ative supply of skilled workers stimulates both automation and invest-ment into improving the productivity of machines, potentially leading skill premia to increase in relative skill supply. Relatedly, trade with a skill-scarce country discourages automation and machine improve-ments, potentially reversing the standard Heckscher-Ohlin effects.

3 STRUCTURAL CHANGE & THE COMPOSITION OF MEN’S AND WOMEN’S PRODUCTIVE TIME

Paul Reimers (Goethe University Frankfurt)

I present evidence on the existence and trends of a gender gap in hours worked by men and women in market production. Using stand-ardized micro-data for a set of 76 countries, I document that in the developing world men work more than twice as many hours per week in income-earning market activities. In the industrialized world, men still spend 50% more time than women in market production. I show that women’s relative amount of market hours catch up to men’s. This comes with the rise of the service sector, as economies undergo structural change. With structural transformation, hours are shifted away from the agricultural sector, towards manufactures and espe-cially towards services, where women have a comparative advantage. I extend an existing model of structural change with gender com-parative advantages, and show that it is capable of reproducing the observed trends in the gender gap in market hours.

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LIST OF PRESENTERS

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SURNAME NAME AFFILIATION

Aghelmaleki Hedieh Heinrich-Heine University

Becker Raphael University of Duisburg-Essen and RGS Econ

Blönnigen Friederike TU Dortmund and RGS Econ

Bocklet Johanna University of Cologne

Brox Enzo University of Konstanz

Canessa Eugenia University of Florence and University of Trento

Canetg Fabio University of Bern

Davoli Maddalena Goethe University Frankfurt

De Keyser Jenke KU Leuven

Endres Angelika Paderborn University

Failache Elisa Universitat Autònoma de Barcelona

Fang Ximeng University of Bonn

Fay Norbert Universität Greifswald

Gama Joao Vasco Universidade NOVA de Lisboa

Ghazaryan Armine University of Southampton

Glas Alexander Heidelberg University

Glück Kevin TU Dortmund and RGS Econ

Gorshkov Andrei Aarhus University

Grünebaum Tim TU Dortmund

Haas Alexander Humboldt University of Berlin and DIW Berlin

Heinzel Joachim Paderborn University

Herrmann Markus Steffen Universität Duisburg-Essen

Hillrichs Dorothee Tilburg University

Hönig Tillman London School of Economics and Political Science

Hötte Kerstin Bielefeld University and Paris-1 Sorbonne Panthéon

Janas Moritz University of Konstanz

Kamalyan Hayk Goethe University Frankfurt

Kämpfen Fabrice University of Lausanne

Katz Matthijs University of Groningen

Keweloh Sascha Alexander TU Dortmund and RGS Econ

Klümper Andreas University of Bonn

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SURNAME NAME AFFILIATION

Kontny Markus University of Hohenheim

Korfhage Thorben RWI

Koser Christoph University of Barcelona

Kulakov Sergej University of Duisburg-Essen

Kulms Marius University of Bonn

Larsen Rasmus Bisgaard University of Copenhagen

Laser Falk Hendrik TU Darmstadt and GSEFM

Laurinaityte Nora Goethe University Frankfurt

Leone Tharcisio GIGA Hamburg

Li Na KU Leuven

Liu Chuan Ruhr-University Bochum

Loebbing Jonas University of Cologne

Maas Benedikt University of Hamburg

Malpede Maurizio Catholic and Bicocca University

Manfrè Martina University of Verona

Marini Matteo M. Universitat Jaume I & Università degli Studi dell'Insubria

Mehic Adrian Lund University

Montag Felix University of Munich

Narajewski Michal Andrzej University of Duisburg-Essen

Ojea Ferreiro Javier Complutense University of Madrid and ECB

Other Lars Friedrich Schiller University Jena

Pahlke Marieke Bielefeld University

Pkhikidze Nina University of Bonn, Center for Development Research (ZEF)

Quast Josefine Friedrich Schiller University Jena

Rehbein Oliver University of Bonn

Reimers Paul Goethe University Frankfurt

Reinelt Timo University of Mannheim

Richter Julia University of Göttingen

Rishabh Kumar University of Basel

Seepe Andre TU Dortmund and RGS Econ

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SURNAME NAME AFFILIATION

Serse Valerio Université catholique de Louvain

Skipka Simon European University Institute

van Buggenum Hugo Tilburg University

Vespermann David A. Heidelberg University

Werbeck Anna RWI and RGS Econ

Wickerath Jan University of Duisburg-Essen and RGS Econ

Yildirim Selen TU Darmstadt

Yin Penghui Goethe University Frankfurt

Zambiasi Diego University College Dublin

Zapata Victor Bielefeld Graduate School of Economics and Management

Zuber Christopher Heidelberg University

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CONFERENCE VENUEUniversity Duisburg Essen Glaspavillon Universitätsstraße 2 45141 Essen

CONTACTRuhr Graduate School in Economics

Fon: +49 201 8149-512 info@rgs-econ.de

www.rgs-econ.de