25 Years IWH

Professor Dr Stefan Eichler

Professor Dr Stefan Eichler
Current Position

since 10/16

Professor of International Monetary Economics 

TU Dresden

since 4/14

Head of the Research Group Financial Market Structure and Financial Stability

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

Research Interests

  • financial crises
  • monetary policy
  • exchange rates
  • international investment

Since October 2016, he is Professor of International Monetary Economics at TU Dresden. Stefan Eichler joined the IWH in April 2014 where he coordinates the Research Group "Financial Market Structure and Financial Stability".

Stefan Eichler studied economics at Chemnitz University of Technology and TU Dresden. In January 2012, he received his doctoral degree at Dresden University of Technology for a dissertation on „Exchange Rate Expectations, Currency Crises, and the Pricing of American Depositary Receipts”. From October 2013 to March 2014, he served as Temporary Professor for Monetary Economics at Technische Universität Dresden. From April to September 2014, he was Junior Professor for International Macroeconomics and Finance at Otto von Guericke University Magdeburg. From October 2014 to September 2016 he was Professor for International Money and Finance at the Leibniz University Hanover.

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Professor Dr Stefan Eichler
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How Do Political Factors Shape the Bank Risk-Sovereign Risk Nexus in Emerging Markets?

Stefan Eichler

in: Review of Development Economics , forthcoming


This paper studies the role of political factors for determining the impact of banking sector distress on sovereign bond yield spreads for a sample of 19 emerging market economies in the period 1994–2013. Using interaction models, I find that the adverse impact of banking sector distress on sovereign solvency is less pronounced for countries with a high degree of political stability, a high level of power sharing within the government coalition, a low level of political constraint within the political system, and for countries run by powerful and effective governments. The electoral cycle pronounces the bank risk–sovereign risk transfer.

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Regional, Individual and Political Determinants of FOMC Members' Key Macroeconomic Forecasts

Stefan Eichler Tom Lähner

in: Journal of Forecasting , forthcoming


We study Federal Open Market Committee members' individual forecasts of inflation and unemployment in the period 1992–2004. Our results imply that Governors and Bank presidents forecast differently, with Governors submitting lower inflation and higher unemployment rate forecasts than bank presidents. For Bank presidents we find a regional bias, with higher district unemployment rates being associated with lower inflation and higher unemployment rate forecasts. Bank presidents' regional bias is more pronounced during the year prior to their elections or for nonvoting bank presidents. Career backgrounds or political affiliations also affect individual forecast behavior.

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Determinants of Illegal Mexican Immigration into the US Southern Border States

A. Buehn Stefan Eichler

in: Eastern Economic Journal , No. 4, 2013


We model illegal immigration across the US-Mexico border into Arizona, California, and Texas as an unobservable variable applying a Multiple Indicators Multiple Causes model. Using state-level data from 1985 to 2004, we test the incentives and deterrents influencing illegal immigration. Better labor market conditions in a US state and worse in Mexico encourage illegal immigration while more intense border enforcement deters it. Estimating the state-specific inflow of illegal Mexican immigrants we find that the 1994/95 peso crisis in Mexico led to significant increases in illegal immigration. US border enforcement policies in the 1990s provided temporary relief while post-9/11 re-enforcement has reduced illegal immigration.

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Working Papers


Central Bank Transparency and Cross-border Banking

Stefan Eichler Helge Littke Lena Tonzer

in: IWH Discussion Papers , No. 16, 2016


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. Central bank transparency and credibility are thus considered complements by banks investing abroad.

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Central Bank Transparency and the Volatility of Exchange Rates

Stefan Eichler Helge Littke

in: IWH Discussion Papers , No. 22, 2017


We analyze the effect of monetary policy transparency on bilateral exchange rate volatility. We test the theoretical predictions of a stylized model using panel data for 62 currencies from 1998 to 2010. We find strong empirical evidence that an increase in the availability of information about monetary policy objectives decreases exchange rate volatility. Using interaction models, we find that this effect is more pronounced for countries with a lower flexibility of goods prices, a lower level of central bank conservatism, and a higher interest rate sensitivity of money demand.

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Regional Banking Instability and FOMC Voting

Stefan Eichler Tom Lähner Felix Noth

in: IWH Discussion Papers , No. 15, 2016


This study analyzes if regionally affiliated Federal Open Market Committee (FOMC) members take their districts’ regional banking sector instability into account when they vote. Considering the period from 1978 to 2010, we find that a deterioration in a district’s bank health increases the probability that this district’s representative in the FOMC votes to ease interest rates. According to member-specific characteristics, the effect of regional banking sector instability on FOMC voting behavior is most pronounced for Bank presidents (as opposed to governors) and FOMC members who have career backgrounds in the financial industry or who represent a district with a large banking sector.

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