Lehrstuhl Volkswirtschaftslehre (Makroökonomie)
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Item Essays in Regional and Innovation Economics(2024) Poghosyan, Knarik; Jung, Philip; Riedel, NadineThis dissertation studies the impacts of research and development (R&D) funding on firm performance and innovation outcomes, focusing on both targeted regional policies and broader R&D initiatives in Germany. Comprising three essays, it explores the direct and spillover effects of these policies at the firm level, using a range of empirical techniques and extensive datasets. The first essay investigates the German Leading-Edge Cluster Competition, finding significant positive effects on innovation and firm performance, especially for small and medium-sized enterprises (SMEs), but limited spillover benefits to non-funded neighboring firms. In the second essay, I analyze R&D funding trends from 1970 to 2020, revealing positive effects on SME performance but minimal impact on innovation, suggesting factors beyond funding may drive these results. The third essay employs a potential outcome model, showing that while R&D funding generates direct benefits, spillover effects play a crucial role in stimulating the total effect. The study also reveals that despite the positive effects of R&D funding, once the concentration of funded firms surpasses a certain threshold, the positive effects begin to diminish. The dissertation offers valuable insights into how different R&D funding types impact firm-level outcomes, contributing to the policy debate on fostering economic growth through R&D investment.Item Taxing high and paying low - essays on German fiscal policy between the wars(2024) Steinbrecher, Hendrik; Jung, Philip; Ritschl, AlbrechtThis thesis examines the employment and tax multipliers of German fiscal policy between the World Wars. Chapter 1 offers an introductory overview. Chapter 2 estimates the regional job multipliers of public job creation schemes financed by the German unemployment insurance between 1933 and 1937. The financial outlay associated with one year of employment in these programmes was found to be 706 RM, a figure that is marginally higher than the rate of unemployment benefits but represents approximately half the average annual wage at the time. The limited additional income generated in comparison to unemployment leaves scant evidence of second-round multiplier effects. Expansionary employment effects were largely limited to the scope of the Nazi programmes themselves. The following two chapters present a qualitative analysis of changes to tax law and a quantitative analysis of the macroeconomic effects of tax changes in the German interwar period. For econometric identification, Chapter 3 develops a novel narrative dataset of tax law changes between 1925 and 1939 and isolates exogenous variation in fiscal policy based on their underlying motivations. In this comprehensive historical account, each amendment is contextualised and supplemented with projected revenue changes using archival material. Chapter 4 addresses the estimation of tax multipliers utilising the previously developed data set. The sign and level of the multiplier are contingent upon whether Brüning's austerity policy between 1930 and 1932 is classified as exogenous or endogenous. Assuming endogeneity, the multiplier takes on a value of up to 2.5, indicating non-standard evidence as a tax increase is associated with an expansionary effect. Conversely, if one adheres to the reasoning of the Borchardt debate and assumes exogeneity for these measures, the standard evidence of an inverse relationship is restored, with the multiplier peaking at -1.5. Finally, Chapter 5 draws implications for academic discourse in economics and history.Item Essays on international trade and economic geography(2023) Abashishvili, Avtandil; Jung, Philip; Wrona, JensThis dissertation consists of three chapters in the field of international trade and economic geography. The first chapter introduces endogenous workplace quality choice into an international trade model with a monopsonistically competitive labour market, in which firms compete for potential employees by offering them a combination of monetary and non-monetary benefits. To attract the workers required to produce for the foreign market in addition to the domestic market, exporting firms have to offer more attractive compensation to their employees than comparable non-exporting firms, which is why they are not only paying higher wages but also offering better workplace amenities. The gains from trade, therefore, not only materialise in terms of a higher purchasing power but also in terms of a higher average workplace quality. Welfare metrics, which exclusively focus on real income gains, might underestimate the gains from globalisation. The second chapter, co-authored with Lu Wei, studies to what extent trade liberalization affects regional production fragmentation. regional input-output data from the European Union (EU) to study the effect of trade liberalization on regional production fragmentation in the EU. We calculate the regional value-added to gross exports (RVAX) ratio to measure the intensity of production sharing across the EU NUTS2 regions. We exploit a unique policy variation associated with the 2004 EU enlargement – abolishing the trade-related tariffs between the EU states and ten new countries joining the EU. Using a gravity-style specification, we quantify the impact of regional tariff reduction on the RVAX ratio. Our findings reveal that a one percentage point decrease in tariff rate between EU member states leads to a 3.2% increase in regional production fragmentation as measured by RVAX. Our results could be interpreted as follows: EU regions facing higher tariff cuts after the EU enlargement got more engaged in cross-border production sharing and increased their trade with their bilateral partners through the regional value chains. The third chapter tests the main prediction of Christaller’s (1933) central place property (CPP), which postulates that the smaller cities can always be found between larger cities. By collecting the data on populated volcanic islands, the spatial distribution of economic activity is matched to the key assumption of CCP, which dictates that all economic activity has to take place either on a line or on a circle. The urban areas on each island are identified using the Open Street map’s building data. The findings demonstrate that, on average, 70% of the size distribution of the neighbouring urban areas follows the spatial pattern predicted by CPP. The size distribution of urban areas in the data is then compared to the counterfactual counterpart obtained by randomizing the location of the cities on each island. A simple one tailed statistical test reveals that the observed and counterfactual size distributions of the cities in the data are significantly different.Item Essays in regional and labor economics(2023) Furbach, Nina; Jung, Philip; Wrona, JensOver the past decades, skilled and unskilled households in Western economies have been making increasingly different location choices. College graduates cluster in dense, urban regions to a considerably larger extent than high school graduates. This thesis tries to make progress in understanding the driving forces behind the diverging location choices of different groups of workers and their implications for regional disparities, policies and welfare. It consists of three self-contained essays that investigate the causes and consequences of geographic worker sorting using highly disaggregated microdata for Germany. Chapter 1 examines to what extent regional disparities in housing costs drive geographic worker sorting by skill. It further analyzes how place-based policies optimally respond to the observed trends. Chapters 2 and 3 investigate the effects of sorting by skill and demographics on regional wage disparities.Item Inheritance taxation, unemployment, and asset pricing in frictional labour markets(2023) Glück, Kevin; Jung, Philip; Linnemann, LudgerThis thesis studies the role of labour market frictions for optimal taxation, unemployment, and asset pricing. Chapter 1 studies inheritance taxation of family-owned firms. Using administrative tax data, this chapter shows that generous deductions for family-owned businesses reduce effective inheritance tax rates in Germany. The tax code does not achieve horizontal equity. A tractable model rationalizes the deductions under incomplete capital markets. A firm that is not marketable and cannot hire an external manager needs an intra-family succession to survive. A firm liquidation causes considerable earnings losses for employees with match-specific human capital. Inheritance tax deductions for business assets, conditional on firm continuation, let firm heirs internalize these earnings losses and incentivize succession of the parents' business. The chapter analytically derives an optimal tax formula. In the baseline calibration, the optimal tax rate for small businesses is close to zero, while it is confiscatory for large firms. Chapters 2 and 3 study the co-movement of equity prices and labour market transitions. The chapters study whether extensions of the Diamond-Mortensen-Pissarides (DMP) framework can jointly generate i) a high volatility of unemployment and stock prices, ii) the striking correlation of unemployment and stock prices and iii) a large equity premium. Chapter 2 globally solves DMP models with endogenous separations and wage rigidity. Models are parametrized to post-war U.S. data. Neither a model with cyclical fluctuations nor a model driven by a small autoregressive component of productivity growth can generate a large risk premium. Chapter 3 presents a DMP model with slow-moving habits and capital adjustment costs. The framework solves both the equity premium and the Shimer puzzle and reproduces the high correlation of employment and equity prices.Item Essays on local labor markets, firm taxation and worker mobility(2020) Korfmann, Philipp; Jung, Philip; Linnemann, LudgerThis thesis investigates the causes and consequences of regional disparities in Germany and consists of three self-contained essays. Each essay utilizes spatially fine-grained microdata for Germany. They differ in focus and methodology but are all inseparably related through the spatial level of analysis. Chapter one provides introductory remarks. The second chapter studies the relative impact of two distinct local business tax instruments on workers' wages. While the primary contribution is the estimation of the effect of a revenue-neutral substitution between two tax instruments, the chapter provides evidence of the amplification of cross-regional wage disparities through local taxation. The third chapter relates regional unemployment differentials to worker flows, recovers underlying structural variations across regions, and investigates the impact of optimal local labor market policies that attenuate within market inefficiencies and balance the adverse effect of unemployment insurance benefits. The fourth chapter studies the characteristics of individual inter-regional migration decisions of employed workers and examines the relationship between individual earnings gains and location characteristics. Chapter five concludes.Item Essays in macroeconomics: The role of housing for monetary and fiscal policy(2016-01) Polattimur, Hamza; Schabert, Andreas; Winkler, RolandThe analysis of monetary and fiscal policy belongs to the central issues in macroeconomics. This thesis provides new insights concerning current monetary and fiscal policy issues by accounting for the role of housing. Recent studies focusing on the interplay of housing and the macroeconomy have outlined the importance of housing along several dimensions, like for business cycles or asset pricing. This thesis analyzes the implications of housing for the ot be enforced, lenders will request collateral from borrowers. This collateral is typically the house of a borrowconduct of monetary and fiscal policy. In the models used in this thesis, the importance of housing stems from its usage as collateral in the presence of financial market imperfections. When debt repayment canner. In each chapter of this thesis, we consider models, which incorporate household sectors consisting of lenders and borrowers who face a collateral constraint. Accounting for the role of housing as collateral, we study the following policy issues. First, we analyze in chapter 2 the preferential tax treatment of housing, like the deductibility of mortgage interest payments from income that is observed in many industrialized countries. In the US, for instance, total housing subsidies added up to 220 billion dollars in 2011, corresponding to 1.5% of GDP. We find that these subsidies can be justified by means of an optimal taxation approach once one accounts for the role of housing as collateral. Second, we quantify in chapter 3 (coauthored with Andreas Schabert) the macroeconomic effects of the Federal Reserve's purchases of mortgage-backed securities, which is one of the unconventional policy measures the Fed used for the first time in its history during the financial crisis after hitting the zero lower bound on the policy rate. We analyze the macroeconomic effects of these purchases, which added up to more than $2 trillion in both MBS purchase programs conducted in the first and third round of quantitative easing programs. We find that they had considerable expansionary effects on output, consumption and prices providing a rationale for this new type of policy measure. Third, chapter 4 provides a theoretical framework with occasionally binding collateral constraints in which government spending is more effective in recessions compared to expansions consistent with what is found by recent empirical research. Moreover, based on this framework we quantify the differences between government spending multipliers in recessions and expansions and find that these are considerably large. To summarize, the studies in this thesis emphasize the importance of housing for monetary and fiscal policy, especially in serving as collateral for private loans. They show how accounting for this role of housing, provides novel insights concerning current monetary and fiscal policy issues ranging from housing subsidies, over the Fed's MBS purchases to the effectiveness of government spending in recessions and expansions.Item Essays in dynamic macroeconomics: public policy, household savings, and lack of commitment(2015) Röttger, Joost; Schabert, Andreas; Linnemann, LudgerThis dissertation consists of three chapters that study how public and private agents make decisions in the absence of commitment. Chapter 1 investigates how the option to default on debt payments affects the conduct of public policy when the government lacks commitment. It studies optimal monetary and fiscal policy without commitment for a cash-credit good economy that is extended by incorporating a discrete default choice. When the government can default on its debt, public policy is shown to change in the short and the long run relative to a scenario without default option. The risk of default increases the volatility of interest rates, impeding the government's ability to smooth tax distortions across states. It also limits public debt accumulation and reduces the government's incentive to implement high inflation in the long run. Chapter 2 is also dedicated to the interaction between monetary and fiscal policy in the absence of commitment but studies the consequences of delegating monetary policy to an inflation conservative central banker. In particular, it develops a model of a small open economy that faces incomplete financial markets, risk of default and political distortions. These frictions matter for many emerging economies and might adversely affect the effectivity and desirability of monetary policy delegation. In the model, monetary and fiscal policy is set by two different authorities. Fiscal policy is chosen by a fiscal authority that exhibits a deficit bias due to political economy frictions and cannot commit to future policies, including debt repayment. Monetary policy is set by a central bank which also lacks commitment and might place a higher value on price stability than society. Despite increasing the average debt burden, the frequency of default and the volatility of fiscal policy, inflation conservatism leads to net welfare gains by successfully implementing lower and more stable inflation. Chapter 3 develops a model of a two-person household whose individual members are altruistic towards each other and lack commitment to future actions, showing how household decision making depends on whether household members cooperate or not. Compared to a household that consists of members that cooperate and make decisions based on a joint objective, the non-cooperative interaction between household members is associated with a savings distortion. When household members are imperfectly altruistic, this distortion is shown to result in an undersaving bias. Using a model version with labor income risk and a precautionary savings motive, Chapter 3 shows that non-cooperative households might save substantially less than cooperative ones when the individual members exhibit imperfect spousal altruism, resulting in sizable welfare losses.Item Essays on Dynamic Macroeconomics(2011-01-20) Rieth, Malte H.; Schabert, Andreas; Linnemann, LudgerThe macroeconomic theory of optimal fiscal and monetary policy based on the assumption of a ‘benevolent dictator’ has identified several key lessons which are thought to substantially improve the economic conditions of a nation (see Chari and Kehoe, 1999, Woodford, 2003): (i) Debt should be zero or negative in the long run, (ii) taxes on capital income should be zero in the long run or on average, and (iii) in the analysis of monetary policy, fiscal policy can largely be neglected. However, due to either distortions in the political process or market frictions beyond reach of policymakers, these optimal, welfare-enhancing policies are often not implemented as recommended by economic theory. The aim of this thesis is therefore twofold: First, to explain the gap between recommended and actually implemented policies and, second, to find mechanisms (or alternative policies) aimed at attenuating these deviations from optimality. Chapter 2 studieswelfare consequences of a soft borrowing constraint on sovereign debt which is modeled as a proportional fine per unit of debt exceeding some reference value. Debt is the result of myopic fiscal policy where the government is assumed to have a smaller discount factor than the private sector. In the absence of lump-sum taxation, debt reduces welfare. The chapter shows that the imposition of the soft borrowing constraint, which resembles features of the Stability and Growth Pact and which is taken into account by the policy maker when setting its instruments, prevents excessive borrowing. The constraint can be implemented such as to (i) control the long run level of debt, (ii) prevent debt accumulation, and (iii) induce debt consolidation. In all three cases the constraint enhances welfare and these gains outweigh the short run welfare losses of increasing the costs of using debt to smooth taxes over the business cycle by two orders of magnitude. Why do governments tax capital in face of the benchmark of standard economic theory that capital ought to be untaxed? Chapter 3 provides a model of fiscal policy with endogenous labour, bonds, and capital in order to account for the observation that worldwide taxes on capital remain far from zero. It introduces policy myopia into an otherwise standard framework of optimal fiscal policy where the government can tax labour and capital income and shows, analytically for the case of quasi-linear preferences and numerically for the case of CRRA preferences, that policy myopia leads to empirically realistic tax rates on capital. Moreover, it is shown that the tax rate on capital increases as myopia increases. Finally, the chapter analyzes the effects of policy myopia on the conduct of fiscal policy over the business cycle. Based on the theoretical analysis of Chapter 3, Chapter 4 presents empirical support for the hypothesis that higher political instability leads to an increase of the tax rate on capital income. The hypothesis is tested on a panel of annual observations for 13 OECD countries for the period 1964-1983. Themain finding is that an increase of the index of political instability by one standard deviation leads to an increase of the tax rate on capital by about 1.8 percentage points. This effect is statistically and economically significant and robust against alternative sets of regressors and measures of the dependent variable, outlier correction, and alternative estimation strategies. Chapter 5 (joint with Markus Kirchner) assesses the role of sovereign risk in explaining macroeconomic fluctuations in Turkey. We estimate two versions of a simple New Keynesian small open economy model on quarterly data for the period 1994Q3-2008Q2: A basic version and a version augmented by a default premium on government debt due to a perceived risk of sovereign debt default. Model comparisons clearly support the augmented version since it leads to stronger internal propagation and hence smaller shocks are required in order to reconcile the observed dynamics of nominal and real variables, leading to better forecasting performance. The results suggest that the augmented model may lead to a better understanding of macroeconomic fluctuations in emerging market economies that are subject to sovereign risk. In terms of policy implications, counterfactual experiments show that both more active monetary policy and stronger fiscal feedbacks from debt on taxes can lead to less volatile inflation and debt dynamics, but higher debt feedbacks on taxation additionally reduce expected default rates.Item Liquidity, interest rates and optimal monetary policy(2011-01-05) Hörmann, Markus; Schabert, Andreas; Holländer, HeinzItem Essays on Heterogeneous Agents(2010-09-28) Bredemeier, Christian; Schabert, Andreas; Linnemann, LudgerItem An asset pricing view on international financial integration(2007-07-03T10:02:53Z) Nitschka, Thomas; Holländer, Heinz; Hoffmann, MathiasItem Essays on empirical macroeconomics(2006-08-07T13:29:11Z) Jüßen, Falko; Holländer, J.; Hoffmann, M.