Abstract This study investigates the direct incidence of the corporate income tax (CIT) through wage bargaining, using an industry-region level panel dataset on all corporations in Germany over the period 1998-2006. For the first time we account for employment effects which result from tax-induced wage changes. Workers share in reductions of the CIT burden; yet, the net effect of wage bargaining on the corporate wage bill, after an exogenous €1 decrease in the CIT burden, is as little as 19-28 cents. This is about half of the effect obtained in prior literature focussing on wages alone.
{"title":"Sharing the Burden? Empirical Evidence on Corporate Tax Incidence","authors":"Nadja Dwenger, Viktor Steiner, Pia Rattenhuber","doi":"10.1111/geer.12157","DOIUrl":"https://doi.org/10.1111/geer.12157","url":null,"abstract":"Abstract This study investigates the direct incidence of the corporate income tax (CIT) through wage bargaining, using an industry-region level panel dataset on all corporations in Germany over the period 1998-2006. For the first time we account for employment effects which result from tax-induced wage changes. Workers share in reductions of the CIT burden; yet, the net effect of wage bargaining on the corporate wage bill, after an exogenous €1 decrease in the CIT burden, is as little as 19-28 cents. This is about half of the effect obtained in prior literature focussing on wages alone.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"44 1","pages":"e107 - e140"},"PeriodicalIF":1.1,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90884241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We provide evidence on the effect of elementary index choice on inflation measurement in the euro area. Using scanner data for 15,844 individual items from 42 product categories and 10 euro area countries, we compute product category level elementary price indexes using eight different elementary index formulas. Measured inflation outcomes of the different index formulas are compared with the Fisher ideal index to quantify elementary index bias. We have three main findings. First, elementary index bias is quite variable across product categories, countries and index formulas. Second, a comparison of elementary index formulas with and without expenditure weights shows that a shift from price only indexes to expenditure weighted indexes would entail at the product level multiple percentage points differences in measured price changes. And finally, we show that elementary index bias is quantitatively more important than upper level substitution bias.
{"title":"Elementary Index Bias: Evidence for the Euro Area from a Large Scanner Dataset","authors":"Enikő Gábor-Tóth, P. Vermeulen","doi":"10.1111/geer.12182","DOIUrl":"https://doi.org/10.1111/geer.12182","url":null,"abstract":"Abstract We provide evidence on the effect of elementary index choice on inflation measurement in the euro area. Using scanner data for 15,844 individual items from 42 product categories and 10 euro area countries, we compute product category level elementary price indexes using eight different elementary index formulas. Measured inflation outcomes of the different index formulas are compared with the Fisher ideal index to quantify elementary index bias. We have three main findings. First, elementary index bias is quite variable across product categories, countries and index formulas. Second, a comparison of elementary index formulas with and without expenditure weights shows that a shift from price only indexes to expenditure weighted indexes would entail at the product level multiple percentage points differences in measured price changes. And finally, we show that elementary index bias is quantitatively more important than upper level substitution bias.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"32 1","pages":"e618 - e656"},"PeriodicalIF":1.1,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76350317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper employs event study methods to evaluate the effects of ECB’s non-standard monetary policy program announcements on 10-year government bond yields of 11 euro area member states. Measurable effects of announcements arise with a one-day delay meaning that government bond markets take some time to react to ECB announcements. The country-specific extent of yield reduction seems inversely related to the solvency rating of the corresponding countries. The spread between core and periphery countries reduces because of a stronger decrease in the latter. This result is confirmed by letting the announcement variable interact with the current spread level.
{"title":"Country-specific euro area government bond yield reactions to ECB’s non-standard monetary policy program announcements","authors":"R. Fendel, Frederik Neugebauer","doi":"10.1515/GER-2018-0094","DOIUrl":"https://doi.org/10.1515/GER-2018-0094","url":null,"abstract":"Abstract This paper employs event study methods to evaluate the effects of ECB’s non-standard monetary policy program announcements on 10-year government bond yields of 11 euro area member states. Measurable effects of announcements arise with a one-day delay meaning that government bond markets take some time to react to ECB announcements. The country-specific extent of yield reduction seems inversely related to the solvency rating of the corresponding countries. The spread between core and periphery countries reduces because of a stronger decrease in the latter. This result is confirmed by letting the announcement variable interact with the current spread level.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"19 1","pages":"417 - 474"},"PeriodicalIF":1.1,"publicationDate":"2019-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73628399","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sebastian Breitfuß, Florian Huber, Martin Feldkircher
Abstract In this paper, we investigate US monetary policy and its time-varying effects over more than 130 years. For that purpose, we use a Bayesian time-varying parameter vector autoregression that features modern shrinkage priors and stochastic volatility. Our results can be summarized as follows: First, we find that monetary policy transmits jointly through the interest rate, credit/bank lending and wealth channels. Second, we find evidence for changes of both responses to a monetary policy shock and volatility characterizing the macroeconomic environment. Effects on the macroeconomy are significantly lower in the period from 1960 to 2013 than in the early part of our sample, whereas responses of short- and long-term interest rates are nearly unaltered throughout the sample. Changes in the way the Fed conducts monetary policy and different economic environments may account for that.
{"title":"Changes in US Monetary Policy and Its Transmission over the Last Century","authors":"Sebastian Breitfuß, Florian Huber, Martin Feldkircher","doi":"10.1111/geer.12154","DOIUrl":"https://doi.org/10.1111/geer.12154","url":null,"abstract":"Abstract In this paper, we investigate US monetary policy and its time-varying effects over more than 130 years. For that purpose, we use a Bayesian time-varying parameter vector autoregression that features modern shrinkage priors and stochastic volatility. Our results can be summarized as follows: First, we find that monetary policy transmits jointly through the interest rate, credit/bank lending and wealth channels. Second, we find evidence for changes of both responses to a monetary policy shock and volatility characterizing the macroeconomic environment. Effects on the macroeconomy are significantly lower in the period from 1960 to 2013 than in the early part of our sample, whereas responses of short- and long-term interest rates are nearly unaltered throughout the sample. Changes in the way the Fed conducts monetary policy and different economic environments may account for that.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"92 1","pages":"447 - 470"},"PeriodicalIF":1.1,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74971451","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract People typically set goals in settings where they cannot be sure of how they will perform, but where their performance is revealed to them in parts over time. When part of the uncertainty is resolved, initial goals may have turned out to be unrealistic and hence they no longer work as a motivation device. Revising goals may increase performance by making goals realistic, but may also adversely affect performance through reduced goal commitment. We study the effects of motivating university students to set goals and inviting them to revise their goals later, using a field experiment involving nearly 2,100 students. We use courses containing two midterms and a final exam, where midterms reduce uncertainty about students’ potential performance. We find that motivating students to set goals does not affect performance on average. Students with midterm grades lower than their goal, decrease their performance. This effect is driven by students who were motivated to set goals without being made aware that they can revise their goals later. This finding may help explain why the evidence of the effectiveness of goals on study performance is mixed.
{"title":"Goal Setting, Information, and Goal Revision: A Field Experiment","authors":"Max Lent","doi":"10.1111/geer.12199","DOIUrl":"https://doi.org/10.1111/geer.12199","url":null,"abstract":"Abstract People typically set goals in settings where they cannot be sure of how they will perform, but where their performance is revealed to them in parts over time. When part of the uncertainty is resolved, initial goals may have turned out to be unrealistic and hence they no longer work as a motivation device. Revising goals may increase performance by making goals realistic, but may also adversely affect performance through reduced goal commitment. We study the effects of motivating university students to set goals and inviting them to revise their goals later, using a field experiment involving nearly 2,100 students. We use courses containing two midterms and a final exam, where midterms reduce uncertainty about students’ potential performance. We find that motivating students to set goals does not affect performance on average. Students with midterm grades lower than their goal, decrease their performance. This effect is driven by students who were motivated to set goals without being made aware that they can revise their goals later. This finding may help explain why the evidence of the effectiveness of goals on study performance is mixed.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"216 1","pages":"e949 - e972"},"PeriodicalIF":1.1,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78775244","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this paper, we investigate whether differences exist among forecasts using real-time or latest-available data to predict gross domestic product (GDP). We employ mixed-frequency models and real-time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real-time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.
{"title":"Should Forecasters Use Real-Time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence","authors":"Katja Heinisch, Rolf Scheufele","doi":"10.1111/geer.12163","DOIUrl":"https://doi.org/10.1111/geer.12163","url":null,"abstract":"Abstract In this paper, we investigate whether differences exist among forecasts using real-time or latest-available data to predict gross domestic product (GDP). We employ mixed-frequency models and real-time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real-time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"1 1","pages":"e170 - e200"},"PeriodicalIF":1.1,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88780386","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper discusses the advantages of Epstein and Zin (1989) (EZ) preferences when building dynamic stochastic general equilibrium (DSGE) models that are consistent with well-known stylized facts of both the business cycle and asset markets. To this end, we combine EZ preferences with several building blocks from the DSGE literature that has tried to solve the equity premium puzzle and to replicate characteristic statistics of the labor market. Our goal is to guide researchers in this area to useful modeling devices and to discuss EZ preferences vis-a-vis the standard time-additive expected utility function. EZ preferences separate the attitude toward risk from the attitude toward intertemporal substitution. We demonstrate that this additional degree of freedom allows us to closely match the empirical facts already in a frictionless production economy with endogenous labor supply. Our study follows Heer and Maußner (2013). We examine models that consider adjustment costs of capital accumulation, consumption habits, and frictions in the allocation of labor. Our empirical targets are estimated from German data.
{"title":"Epstein–Zin Utility, Asset Prices, and the Business Cycle Revisited","authors":"C. Heiberger, Halvor Ruf","doi":"10.1111/geer.12186","DOIUrl":"https://doi.org/10.1111/geer.12186","url":null,"abstract":"Abstract This paper discusses the advantages of Epstein and Zin (1989) (EZ) preferences when building dynamic stochastic general equilibrium (DSGE) models that are consistent with well-known stylized facts of both the business cycle and asset markets. To this end, we combine EZ preferences with several building blocks from the DSGE literature that has tried to solve the equity premium puzzle and to replicate characteristic statistics of the labor market. Our goal is to guide researchers in this area to useful modeling devices and to discuss EZ preferences vis-a-vis the standard time-additive expected utility function. EZ preferences separate the attitude toward risk from the attitude toward intertemporal substitution. We demonstrate that this additional degree of freedom allows us to closely match the empirical facts already in a frictionless production economy with endogenous labor supply. Our study follows Heer and Maußner (2013). We examine models that consider adjustment costs of capital accumulation, consumption habits, and frictions in the allocation of labor. Our empirical targets are estimated from German data.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"39 1","pages":"e730 - e758"},"PeriodicalIF":1.1,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80026672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract I analyze the competition among different countries for ‘desirable’ and ‘undesirable’ potential immigrants, using both an immigration quota and a level of (imperfect) ‘scrutiny’ that would-be immigrants face. Scrutiny imposes costs on immigrants and therefore makes it less attractive to immigrate. The number of applying undesirable immigrants increases in immigration quota and decreases in the level of scrutiny. In contrast, the number of desirable applicants can go in either direction as scrutiny increases and is independent of the immigration quota, because an increase in the immigration quota is completely crowded out by more applications by undesirable immigrants.
{"title":"Competing for Good Immigrants","authors":"Zaruhi Sahakyan","doi":"10.1111/geer.12194","DOIUrl":"https://doi.org/10.1111/geer.12194","url":null,"abstract":"Abstract I analyze the competition among different countries for ‘desirable’ and ‘undesirable’ potential immigrants, using both an immigration quota and a level of (imperfect) ‘scrutiny’ that would-be immigrants face. Scrutiny imposes costs on immigrants and therefore makes it less attractive to immigrate. The number of applying undesirable immigrants increases in immigration quota and decreases in the level of scrutiny. In contrast, the number of desirable applicants can go in either direction as scrutiny increases and is independent of the immigration quota, because an increase in the immigration quota is completely crowded out by more applications by undesirable immigrants.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"42 1","pages":"e852 - e871"},"PeriodicalIF":1.1,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86839834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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