25 Years IWH

Centre for Evidence-based Policy Consulting (IWH-CEP)

The Centre for Evidence-based Policy Consulting (IWH-CEP) of the IWH was founded in 2014. It is a platform that bundles and structures activities in research, teaching, and policy consulting. IWH-CEP pursues the objective of creating better foundations for a causal analysis of policy implemented across different sectors.

IWH-CEP is designed as a service unit and supports the activities in the research groups by providing access to a supra-regional research and policy consulting network as well as access to data sets for causal analyses. IWH-CEP lies at the interface between three areas of responsibility and carries out coordination functions between them.

Centre for Evidence-based Policy Consulting (IWH-CEP)

The government intervenes in the market mechanism through a lot of policy instruments in order to achieve various economic objectives. However, for policy makers, it is important to know whether the originally intended objectives are also achieved. Scientific methods can make a significant contribution to this. These are necessary to establish a clear connection between a policy instrument and its effect. Against this background, the Centre for Evidence-based Policy Consulting (IWH-CEP) at the IWH was founded.

Research and Policy Consulting

Research and policy consulting are organized via the different research groups of the IWH. This organizational structure allows to assess policy changes from both a macro and micro perspective and cover different sectors of the economy.

To gain a better understanding of structural changes and economic growth, a first focus is set on the evaluation of industrial policy schemes,for example, the "Joint Task of 'Improving the Regional Economic Structure'" in the Federal State of Saxony-Anhalt (which is the most important regional policy support scheme in Germany) is being evaluated. The objective of the project is to use different evaluation techniques to assess the impact if policy support measures.. The project is carried out under the responsibility of IWH Research Group "The Performance of Firms and Regions".

A second key area  includes analyses on regulatory reforms and effects. Especially having in mind that after the recent financial crisis, a re-regulation of the financial system took place, it is of utmost importance to evaluate the effectiveness of the reforms as well as to assess whether there are unintended side-effects. In the context of the project "The Political Economy of the European Banking Union", researchers in the financial markets departments study how the directives underlying the European Banking Union are implemented across member states as well as whether the new regulatory framework has implications for banking stability and financial intermediation.

Set-up of a Network

IWH-CEP is part of the initiative for "Evidence-based Economic Policy", which is established by the Verein für Socialpolitik (German Economic Association). Through the connection with the initiative, visibility and knowledge transfer should be guaranteed in the scientific and political community.

Set-up and Maintenance of Databases


The major challenge in the analysis of effects of government interventions and regulatory changes  lies in the development of granular data. IWH-CEP advances into this direction by building up databases that can be shared with other researchers.

As such, at the IWH R&D Micro Database is set up, maintained and completed according to the (current) specialisation in the analysis of effects of industrial policy support schemes. Information about the funded projects alone is not sufficient to conduct causal analyses – corporate data of the official and commercial statistics must be referred to; this is organised using record linkage techniques. This task is carried out at the IWH Research Data Centre.

Additionally, the financial market department has set up the website International Banking Library, which is a web-based platform for the exchange of research on cross-border banking. It provides access to data sources, academic research, both theoretical and empirical on cross-border banking, as well as information on regulatory initiatives. Thus, the website provides researcher and policymakers with a comprehensive overview of available data to conduct policy evaluation and the current stance of the literature on regulation and supervision of financial markets. The quarterly newsletter summarizes recent developments and is received by both academics and central bankers.

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Central Bank Transparency and Cross-border Banking

Stefan Eichler Helge Littke Lena Tonzer

in: Journal of International Money and Finance , No. 6, 2017


We analyze the effect of central bank transparency on cross-border bank activities. Based on a panel gravity model for cross-border bank claims for 21 home and 47 destination countries from 1998 to 2010, we find strong empirical evidence that a rise in central bank transparency in the destination country, on average, increases cross-border claims. Using interaction models, we find that the positive effect of central bank transparency on cross-border claims is only significant if the central bank is politically independent and operates in a stable economic environment. Central bank transparency and credibility are thus considered complements by banks investing abroad.

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Joint R&D Subsidies, Related Variety, and Regional Innovation

T. Broekel Matthias Brachert M. Duschl T. Brenner

in: International Regional Science Review , No. 3, 2017


Subsidies for research and development (R&D) are an important tool of public R&D policy, which motivates extensive scientific analyses and evaluations. This article adds to this literature by arguing that the effects of R&D subsidies go beyond the extension of organizations’ monetary resources invested into R&D. It is argued that collaboration induced by subsidized joint R&D projects yield significant effects that are missed in traditional analyses. An empirical study on the level of German labor market regions substantiates this claim, showing that collaborative R&D subsidies impact regions’ innovation growth when providing access to related variety and embedding regions into central positions in cross-regional knowledge networks.

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Transposition Frictions, Banking Union, and Integrated Financial Markets in Europe

Michael Koetter Thomas Krause Lena Tonzer

in: G20 Insights Policy Brief, Policy Area "Financial Resilience" , 2017


In response to the financial crisis of 2007/2008, policymakers implemented comprehensive changes concerning the regulation and supervision of banks. Many of those changes, including Basel III or the directives pertaining to the Single Rulebook in the European Union (EU), are agreed upon at the supranational level, which constitutes a key step towards harmonized regulation and supervision in an integrated European financial market. However, the success of these reforms depends on the uniform and timely implementation at the national level. Avoiding strategic delays to implement EU regulation into national laws should thus constitute a main target of the G20.

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International Banking and Cross-border Effects of Regulation: Lessons from Germany

Jana Ohls Markus Pramor Lena Tonzer

in: International Journal of Central Banking , 2017


We analyze the inward and outward transmission of regulatory changes through German banks’ (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments. These spillovers are, however, quite heterogeneous between types of banks and can only be observed for some instruments. For instance, domestic affiliates of foreign-owned global banks reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements, and loan-to-value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements is effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.

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Assessing the Effects of Regulatory Bank Levies

Claudia M. Buch Lena Tonzer Benjamin Weigert

in: VOX CEPR's Policy Portal , 2017


In response to the Global Crisis, governments have implemented restructuring and resolution regimes backed by funds financed by bank levies. Bank levies aim to internalise system risk externalities and to provide funding for bank recovery and resolution. This column explores bank levy design by considering the German and European cases. The discussion points to the importance of structured policy evaluations to determine the effects of levies.

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