Regulation, Innovation and Technology Diffusion - Evidence from Building Energy E fficiency Standards in Germany
Makram El-Shagi, Claus Michelsen, Sebastian Rosenschon
Discussionpapers des DIW Berlin,
No. 1371,
2014
Abstract
The impact of environmental regulation on technology diffusion and innovations is studied using a unique data set of German residential buildings. We analyze how energy effi ciency regulations, in terms of minimum standards, affects energy-use in newly constructed buildings and how it induces innovation in the residential-building industry. The data used consists of a large sample of German apartment houses built between 1950 and 2005. Based on this information, we determine their real energy requirements from energy performance certificates and energy billing information. We develop a new measure for regulation intensity and apply a panel-error-correction regression model to energy requirements of low and high quality housing. Our findings suggest that regulation significantly impacts technology adoption in low quality housing. This, in turn, induces improvements in the high quality segment where innovators respond to market signals.
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Fiscal Equalization, Tax Salience, and Tax Competition
Martin Altemeyer-Bartscher
IWH Discussion Papers,
No. 3,
2014
Abstract
Jurisdictions that engage in inter-regional tax competition usually try to attenuate competitive pressures by substituting salient tax instruments with hidden ones. On this effect, we investigate the efficiency consequences of inter-regional tax competition and fiscal equalization in a federal system when taxpayers fail to optimally react on shrouded attributes of local tax policy. If the statuary tax rate is a relatively salient instrument and taxpayers pay low attention to the quality and the frequency of tax enforcement, the underlying substitution of tax instruments with the aim of reducing the perceived tax price may suppress the under-exploitation of tax bases that is typically triggered by fiscal equalization.
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Impact of Personal Economic Environment and Personality Factors on Individual Financial Decision Making
S. Prinz, G. Gründer, R. D. Hilgers, Oliver Holtemöller, I. Vernaleken
Frontiers in Decision Neuroscience,
No. 158,
2014
Abstract
This study on healthy young male students aimed to enlighten the associations between an individual’s financial decision making and surrogate makers for environmental factors covering long-term financial socialization, the current financial security/responsibility, and the personal affinity to financial affairs as represented by parental income, funding situation, and field of study. A group of 150 male young healthy students underwent two versions of the Holt and Laury (2002) lottery paradigm (matrix and random sequential version). Their financial decision was mainly driven by the factor “source of funding”: students with strict performance control (grants, scholarships) had much higher rates of relative risk aversion (RRA) than subjects with support from family (ΔRRA = 0.22; p = 0.018). Personality scores only modestly affected the outcome. In an ANOVA, however, also the intelligence quotient significantly and relevantly contributed to the explanation of variance; the effects of parental income and the personality factors “agreeableness” and “openness” showed moderate to modest – but significant – effects. These findings suggest that environmental factors more than personality factors affect risk aversion.
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In Search for Yield? Survey-based Evidence on Bank Risk Taking
Claudia M. Buch, S. Eickmeier, Esteban Prieto
Journal of Economic Dynamics and Control,
No. 43,
2014
Abstract
Monetary policy can have an impact on economic and financial stability through the risk taking of banks. Falling interest rates might induce investment into risky activities. This paper provides evidence on the link between monetary policy and bank risk taking. We use a factor-augmented vector autoregressive model (FAVAR) for the US for the period 1997–2008. Besides standard macroeconomic indicators, we include factors summarizing information provided in the Federal Reserve’s Survey of Terms of Business Lending (STBL). These data provide information on banks׳ new loans as well as interest rates for different loan risk categories and different banking groups. We identify a risk-taking channel of monetary policy by distinguishing responses to monetary policy shocks across different types of banks and different loan risk categories. Following an expansionary monetary policy shock, small domestic banks increase their exposure to risk. Large domestic banks do not change their risk exposure. Foreign banks take on more risk only in the mid-2000s, when interest rates were ‘too low for too long’.
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Estimating Monetary Policy Rules when the Zero Lower Bound on Nominal Interest Rates is Approached
Konstantin Kiesel, M. H. Wolters
Kiel Working Papers, No. 1898,
2014
Abstract
Monetary policy rule parameters estimated with conventional estimation techniques can be severely biased if the estimation sample includes periods of low interest rates. Nominal interest rates cannot be negative, so that censored regression methods like Tobit estimation have to be used to achieve unbiased estimates. We use IV-Tobit regression to estimate monetary policy responses for Japan, the US and the Euro area. The estimation results show that the bias of conventional estimation methods is sizeable for the inflation response parameter, while it is very small for the output gap response and the interest rate smoothing parameter. We demonstrate how IV-Tobit estimation can be used to study how policy responses change when the zero lower bound is approached. Further, we show how one can use the IV-Tobit approach to distinguish between desired policy responses, that the central bank would implement if there was no zero lower bound, and the actual ones and provide estimates of both.
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Macroeconomic Factors and Micro-Level Bank Risk
Claudia M. Buch
Bundesbank Discussion Paper 20/2010,
2010
Abstract
The interplay between banks and the macroeconomy is of key importance for financial and economic stability. We analyze this link using a factor-augmented vector autoregressive model (FAVAR) which extends a standard VAR for the U.S. macroeconomy. The model includes GDP growth, inflation, the Federal Funds rate, house price inflation, and a set of factors summarizing conditions in the banking sector. We use data of more than 1,500 commercial banks from the U.S. call reports to address the following questions. How are macroeconomic shocks transmitted to bank risk and other banking variables? What are the sources of bank heterogeneity, and what explains differences in individual banks’ responses to macroeconomic shocks? Our paper has two main findings: (i) Average bank risk declines, and average bank lending increases following expansionary shocks. (ii) The heterogeneity of banks is characterized by idiosyncratic shocks and the asymmetric transmission of common shocks. Risk of about 1/3 of all banks rises in response to a monetary loosening. The lending response of small, illiquid, and domestic banks is relatively large, and risk of banks with a low degree of capitalization and a high exposure to real estate loans decreases relatively strongly after expansionary monetary policy shocks. Also, lending of larger banks increases less while risk of riskier and domestic banks reacts more in response to house price shocks.
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A Macroeconomist’s View on EU Governance Reform: Why and How to Establish Policy Coordination?
Hubert Gabrisch
Economic Annals,
No. 191,
2011
Abstract
This paper discusses the need for macroeconomic policy coordination in the E(M)U. Coordination of national policies with cross-border effects does not exist at the macroeconomic level, although requested by the EU Treaty. The need for coordination stems from current account imbalances, which origin in market-induced capital flows, destabilizing the real exchange rates between low and high wage countries. The recent attempts of the Commission and the European Council to reform E(M)U governance do not address this problem and thus remain incapable to protect against future instability.
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What Drives FDI in Central-eastern Europe? Evidence from the IWH-FDI-Micro Database
Andrea Gauselmann, Mark Knell, Johannes Stephan
Post-Communist Economies,
No. 3,
2011
Abstract
The focus of this paper is on the match between strategic motives of foreign investments into Central-Eastern Europe and locational advantages offered by these countries. Our analysis makes use of the IWH-FDI-Micro Database, a unique dataset that contains information from 2009 about the determinants of locational factors, technological activity of the subsidiaries, and the potentials for knowledge spillovers in the Czech Republic, Hungary, Poland, Romania, and Slovakia. The analysis suggests that investors in these countries are mainly interested in low (unit) labour costs coupled with a well-trained and educated workforce and an expanding market with the high growth rates in the purchasing power of potential buyers. It also suggests that the financial crisis reduced the attractiveness of the region as a source for localised knowledge and technology. There appears to be a match between investors’ expectations and the quantitative supply of unqualified labour, not however for the supply of medium qualified workers. But the analysis suggests that it is not technology-seeking investments that are particularly content with the capabilities of their host economies in terms of technological cooperation. Finally, technological cooperation within the local host economy is assessed more favourably with domestic firms than with local scientific institutions – an important message for domestic economic policy.
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Vigorous upswing continues
Wirtschaft im Wandel,
No. 3,
2011
Abstract
The worldwide upswing has gained momentum since last autumn. The main cause for the high growth dynamics is a monetary policy that is very expansive not only in advanced economies, where the utilization rates for production capacities are mostly still low, but also in emerging market economies that in general have already recovered from the Great Recession.
The German economy participates in the worldwide upswing. Here the recovery is ahead of those in most other advanced economies. Both exports and domestic demand are strongly expanding. One reason for the high growth dynamics is that key interest rates are particularly low for Germany, as the ECB has to take into account that many euro area economies are much more fragile. In addition, Germany still benefits from the wage moderation and the labour market reforms in the past decade: employment is expanding strongly, and firms find many profitable investment projects.
Major risks for this forecast are structural problems of some advanced economies that had become visible during the Great Recession and are still unresolved (concerning the US housing market and the crisis of confidence in the fiscal sustainability of some euro area countries in particular). A further risk is the possibility of further oil price hikes due to political instability in North Africa and the Middle East.
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