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The German far right and the scars of reunificationOliver HoltemöllerFinancial Times, September 6, 2024
We study how deposit competition affects a bank's decision to securitize mortgages. Exploiting the state-specific removal of deposit market caps across the U.S. as a source of competition, we find a 7.1 percentage point increase in the probability that banks securitize mortgage loans. This result is driven by an 11 basis point increase in deposit costs and corresponding reductions in banks' deposit holdings. Our results are strongest among banks that rely more on deposit funding. These findings highlight a hitherto undocumented and unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.
Wage mobility reduces the persistence of wage inequality. We develop a framework to quantify the contribution of employer-to-employer movers to aggregate wage mobility. Using three decades of German social security data, we find that inequality increased while aggregate wage mobility decreased. Employer-to-employer movers exhibit higher wage mobility, mainly due to changes in employer wage premia at job change. The massive structural changes following German unification temporarily led to a high number of movers, which in turn boosted aggregate wage mobility. Wage mobility is much lower at the bottom of the wage distribution, and the decline in aggregate wage mobility since the 1980s is concentrated there. The overall decline can be mostly attributed to a reduction in wage mobility per mover, which is due to a compositional shift toward lower-wage movers.
This paper investigates the critical role of church membership in the process of economic recovery after high-impact natural disasters. We document a significant adverse treatment effect of the 2005 hurricane season in the Southeastern United States on establishment-level productivity. However, we find that establishments in counties with higher rates of church membership saw a significantly stronger recovery in terms of productivity for 2005–10. We also show that church membership is correlated with post-disaster entrepreneurship activities and population growth.
This paper investigates the relationship between heterogeneity in sectoral price stickiness and the response of the economy to aggregate real shocks. We show that sectoral heterogeneity reduces inflation persistence for a constant average duration of price spells, and that inflation persistence can fall despite duration increases associated with increases in heterogeneity. We also find that sectoral heterogeneity reduces the persistence and volatility of interest rate and output gap for a constant price spells duration, while the qualitative impact on inflation volatility tends to be positive. A relevant policy implication is that neglecting price stickiness heterogeneity can impair the economic dynamics assessment.
Climate change and inequality are critical and interrelated defining issues for this century. Despite growing empirical evidence on the economic incidence of climate policies and impacts, mainstream model-based assessments are often silent on the interplay between climate change and economic inequality. For example, all the major model comparisons reviewed in IPCC neglect within-country inequalities. Here we fill this gap by presenting a model ensemble of eight large-scale Integrated Assessment Models belonging to different model paradigms and featuring economic heterogeneity. We study the distributional implications of Paris-aligned climate target of 1.5 degree and include different carbon revenue redistribution schemes. Moreover, we account for the economic inequalities resulting from residual and avoided climate impacts. We find that price-based climate policies without compensatory measures increase economic inequality in most countries and across models. However, revenue redistribution through equal per-capita transfers can offset this effect, leading to on average decrease in the Gini index by almost two points. When climate benefits are included, inequality is further reduced, but only in the long term. Around mid-century, the combination of dried-up carbon revenues and yet limited climate benefits leads to higher inequality under the Paris target than in the Reference scenario, indicating the need for further policy measures in the medium term.
