flexpaneldid: A Stata Toolbox for Causal Analysis with Varying Treatment Time and Duration
Eva Dettmann, Alexander Giebler, Antje Weyh
IWH Discussion Papers,
No. 3,
2020
Abstract
The paper presents a modification of the matching and difference-in-differences approach of Heckman et al. (1998) for the staggered treatment adoption design and a Stata tool that implements the approach. This flexible conditional difference-in-differences approach is particularly useful for causal analysis of treatments with varying start dates and varying treatment durations. Introducing more flexibility enables the user to consider individual treatment periods for the treated observations and thus circumventing problems arising in canonical difference-in-differences approaches. The open-source flexpaneldid toolbox for Stata implements the developed approach and allows comprehensive robustness checks and quality tests. The core of the paper gives comprehensive examples to explain the use of the commands and its options on the basis of a publicly accessible data set.
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Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains
Yusuf Mercan, Benjamin Schoefer
American Economic Review: Insights,
No. 1,
2020
Abstract
In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56 percent of vacancies as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly track quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.
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12.02.2020 • 2/2020
Causes of populism: IWH begins international research project
Is the increasing strength of populist parties due to economic causes? The Halle Institute for Economic Research (IWH) is set to play a leading role in scrutinising this controversial question with immediate effect, together with researchers from England, Scotland and the Czech Republic. The Volkswagen Foundation is funding this interdisciplinary project to the tune of almost one million euro for four years.
Steffen Müller
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Total Factor Productivity and the Terms of Trade
Jan Teresinski
IWH-CompNet Discussion Papers,
No. 6,
2019
Abstract
In this paper we analyse how the terms of trade (TOT) – the ratio of export prices to import prices – affect total factor productivity (TFP). We provide empirical macroeconomic evidence for the European Union countries based on the times series SVAR analysis and microeconomic evidence based on industry level data from the Competitiveness Research Network (CompNet) database which shows that the terms of trade improvements are associated with a slowdown in the total factor productivity growth. Next, we build a theoretical model which combines open economy framework with the endogenous growth theory. In the model the terms of trade improvements increase demand for labour employed in exportable goods production at the expense of technology production (research and development – R&D) which leads to a shift of resources from knowledge development towards physical exportable goods. This reallocation has a negative impact on the TFP growth. Under a plausible calibration the model is able to replicate the observed empirical pattern.
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What Drives the Commodity-Sovereign-Risk-Dependence in Emerging Market Economies?
Hannes Böhm, Stefan Eichler, Stefan Gießler
Abstract
Using daily data for 34 emerging markets in the period 1994-2016, we find robust evidence that higher export commodity prices are associated with higher sovereign bond returns (indicating lower sovereign risk). The economic effect is especially pronounced for heavy commodity exporters. Examining the drivers, we find, first, that commodity-dependence is higher for countries that export large volumes of volatile commodities and that the effect increases in times of recessions, high inflation, and expansionary U.S. monetary policy. Second, the importance of raw material prices for sovereign financing can likely be mitigated if a country improves institutions and tax systems, attracts FDI inflows, invests in manufacturing, machinery and infrastructure, builds up reserve assets and opens capital and trade accounts. Third, the concentration of commodities within a country’s portfolio, its government indebtedness or amount of received development assistance appear to be only of secondary importance for commodity-dependence.
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Short-term Economic Effects of a "Brexit" on the German Economy
Hans-Ulrich Brautzsch, Geraldine Dany-Knedlik, Andrej Drygalla, Stefan Gebauer, Oliver Holtemöller, Martina Kämpfe, Axel Lindner, Claus Michelsen, Malte Rieth, Thore Schlaak
IWH Online,
No. 3,
2019
Abstract
Many questions about Brexit remain open. It is still possible that the UK and the European Union will not be able to agree on a withdrawal agreement. In this case a so-called hard Brexit (No-Deal Brexit) would happen. We have examined the short-term effects of a hard Brexit for the German economy. In a first step, effects via the trading channel are estimated based on an input-output analysis of international and sectoral links. The result is a loss of 0.3% relative to gross domestic product. This magnitude also results from the international Halle Economic Projection Model, which takes into account macroeconomic repercussions. A hard Brexit would, in addition to the trade barriers, mean significant uncertainty for firms and households. On the demand side, this has a negative impact on investment activity and private consumption. Taken alone, these effects amount to 0.1% of gross domestic product. Overall, German gross domestic product could be dampened by several tenths of a percentage point in the one to two years following a hard Brexit. The automotive industry would probably suffer most. However, recommendations for discretionary economic policy measures aimed at dampening short-term macroeconomic effects or at individual economic sectors cannot be derived from this. The automatic stabilizers are sufficient given the expected magnitude of the effects.
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Fiscal Stimulus and Consumer Debt
Yuliya Demyanyk, Elena Loutskina, Daniel Murphy
Review of Economics and Statistics,
No. 4,
2019
Abstract
In the aftermath of the consumer debt–induced recession, policymakers have questioned whether fiscal stimulus is effective during periods of high consumer indebtedness. This study empirically investigates this question. Using detailed data on Department of Defense spending for the 2007–2009 period, we document that the open-economy relative fiscal multiplier is higher in geographies with higher consumer debt. The results suggest that in the short term (2007–2009), fiscal policy can mitigate the adverse effect of consumer (over)leverage on real economic output during a recession. We then exploit detailed microdata to show that both heterogeneous marginal propensities to consume and slack-driven economic mechanisms contribute to the debt-dependent multiplier.
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Police Reorganization and Crime: Evidence from Police Station Closures
Sebastian Blesse, André Diegmann
Abstract
Does the administrative organization of police affect crime? In answering this question, we focus on the reorganization of local police agencies. Specifically, we study the effects police force reallocation via station closures has on local crime. We do this by exploiting a quasi-experiment where a reform substantially reduced the number of police stations. Combining a matching strategy with an event-study design, we find no effects on total theft. Police station closures, however, open up tempting opportunities for criminals in car theft and burglary in residential properties. We can rule out that our effects arise from incapacitation, crime displacement, or changes in employment of local police forces. Our results suggest that criminals are less deterred after police station closures and use the opportunity to steal more costly goods.
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Pricing Sin Stocks: Ethical Preference vs. Risk Aversion
Stefano Colonnello, Giuliano Curatola, Alessandro Gioffré
European Economic Review,
2019
Abstract
We develop an ethical preference-based model that reproduces the average return and volatility spread between sin and non-sin stocks. Our investors do not necessarily boycott sin companies. Rather, they are open to invest in any company while trading off dividends against ethicalness. When dividends and ethicalness are complementary goods and investors are sufficiently risk averse, the model predicts that the dividend share of sin companies exhibits a positive relation with the future return and volatility spreads. An empirical analysis supports the model’s predictions. Taken together, our results point to the importance of ethical preferences for investors’ portfolio choices and asset prices.
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