Working Paper
Direct Elicitation of Parametric Belief Distributions: An application to inflation expectations
(2024)
We introduce a novel method to elicit belief distributions and apply it to elicit inflation expectations in a representative US sample through a pre-registered survey experiment. Our approach elicits beta belief distributions directly in a two-step process. First, participants specify their minimum and maximum expected inflation. They then use a graphical interface with two sliders to adjust the mean and variance of their inflation belief distribution. We benchmark our method against the “Bins” method, popularized by the New York Fed’s Survey of Consumer Expectations (SCE). Our findings reveal significant variations in elicited belief distributions depending on the method used. Specifically, our approach yields higher mean inflation estimates and substantially reduces the standard deviations of the distributions. Respondents report that our method is easier to use, more engaging, and better allows them to express their beliefs. Furthermore, the resulting distributions more accurately reflect participants’ beliefs across several dimensions and show stronger correlations with their point predictions.
In March 2024, the Franco-German Parliamentary Assembly (FGPA) celebrated its fifth anniversary. This binational forum can be viewed as a genuine step towards integration in Franco-German relations besides the Aachen Treaty. The FGPA is designed to be a watchdog over the Franco-German treaties and to bring together political actors of both countries to discuss and resolve conflictual issues and contribute to European initiatives. After five years of its being, the results are mixed. Franco-German governmental relations are more conflictual than ever. While the FGPA proved added value during the Covid-19 pandemic by convincing the French and German interior ministers to lift border controls, it has been notably reticent on the Ukraine war and other foreign policy conflicts. The FGPA would benefit by being bolder and extricating itself step-by-step from national political constraints. In this way, parliamentary dialogue can help the two key partners to find common ground on a range of European issues.
Kein EU-Geld für Thüringen? - Die Anwendbarkeit von EU-Rechtsstaatlichkeitsmechanismen auf Regionen
(2024)
Am 1. September ist Landtagswahl in Thüringen. Dort könnte die rechtsextreme AfD mit deutlichem Vorsprung stärkste Kraft werden. Deshalb wird jetzt diskutiert, wie man Demokratie und Rechtsstaatlichkeit auf Landesebene vor autoritären Kräften schützen kann. Auch die EU könnte hier eine Rolle spielen. Bisher hat die Kommission hauptsächlich auf Angriffe auf demokratische Institutionen auf nationaler Ebene reagiert. Aber auch regionale Regierungen müssen sich an die Grundwerte der EU halten. In einem föderalen System wie Deutschland spielen die Bundesländer außerdem eine wichtige Rolle bei der Umsetzung von Europarecht und verwalten EU-Fördergelder in Milliardenhöhe. Die Analyse zeigt am Beispiel von Thüringen, dass die meisten Rechtsstaatlichkeitsinstrumente der EU auch auf regionaler Ebene angewandt werden könnten. Dabei wäre das Zurückhalten von EU-Fördergeldern das effektivste Mittel.
Besley and Persson (2023) pioneer a political economy model of a green transition with changing preferences. Here we solve for the optimal policy intervention and find that the optimal tax on the polluting good starts high and is subsequently declining, to support the transition in preferences. We quantify the welfare loss of ignoring preference changes.
The Basel credit-to-GDP gap is the single most popular measure of excessive credit growth and the financial cycle in general. It is based, however, on a purely statistical understanding of excessiveness: Growth is excessive if the credit-to-GDP ratio (i.e. the ratio of credit to nominal GDP) is significantly above its long-term trend. This paper presents an alternative approach where variation in the credit-to-GDP ratio is decomposed into its structural economic drivers. Some of these economic drivers are assumed to be non-excessive (aggregate demand and supply shocks), and others to be potentially excessive (all other shocks). Based on this identification, I construct a more structural credit gap measure that quantifies the impact of excessive drivers. In an early-warning exercise, I show that this gap measure performs particulary well in predicting financial crises at relatively short horizons.
In Germany, the Russian war on Ukraine is widely perceived as a “Zeitenwende,” a watershed moment undermining key foreign policy beliefs. Despite mounting evidence contradicting them, German elites previously failed to adapt core beliefs regarding Russia and the use of force because these beliefs were not deeply embedded in largely contested identity constructions but also shaped the definition of economic interests, which in turn made ideational adaptation more costly. Moreover, Germany’s extraordinarily beneficial geopolitical situation in the post-Cold War era meant that the country could afford not to learn. Although the “Zeitenwende” will trigger significant change, it is unclear which lessons exactly Germans will now be learning and how far that adaptation will go. Given Germany’s key position in Europe and its previous role in shaping the European and transatlantic policy toward Russia, the results of these learning processes will significantly shape the emerging security European order.
We consider a monopolistic certifier selling certification services to a partially privately informed seller. The certifier can enable the seller to disclose her private information publicly, as well as gather additional market information about the good's quality publicly. We show that the certifier's optimal contract exhibits maximal disclosure but non-maximal information-gathering. Thus, optimal contracts eliminate private information but not market uncertainty; even though the latter would be costless, it is suboptimal as it requires excessive information rents to the seller. Thus, market inefficiencies remain due to market uncertainty but not due to private information.
Using a stacked differences-in-differences approach, we study the effects of Low Emission Zones (LEZs) in Germany. The implementation of stage 1 and 2 LEZs, which banned the most pollution-intensive vehicles from city centers, significantly reduced PM10 concentrations. The most restrictive third stage had no detectable, additional effect. Analyzing the mechanisms behind these improvements, we find weak evidence of a 2% traffic decline inside LEZs. Exploiting novel data, our main results document small but precisely estimated effects on the local fleet composition: LEZs induced the replacement of 50,000 older, emission-intensive diesel vehicles with newer, less polluting gasoline cars. Our estimates suggest that LEZs had lower social costs than previously estimated.
We quantify the housing-consumption channel in mortgage demand according to which households borrow more following house-price increases since housing and non-housing consumption are imperfect substitutes. To identify this channel, we take a structural approach to mortgage demand and supply, exploiting exogenous variation in house-price growth and a unique dataset with matched transaction- price and mortgage information. We estimate an elasticity of mortgage borrowing to house-prices of 0.82. Counterfactual analysis of the general-equilibrium of housing and mortgage markets shows that, sans housing-consumption channel, mortgage and house-price growth in the UK would have been 50% and 31% lower, respectively, since the 1990s.
Separate Housework Spheres
(2024)
Using novel time-use data from Germany before and after reunification, we document two facts: First, spouses who both work full-time exhibit similar housework patterns whether they do so voluntarily or due to a full-time mandate, as in the GDR. Second, men’s amount of housework is independent of their spouse’s labour supply. We theoretically explain this pattern by the presence of two household goods and socially learned gender-specific comparative advantage in their home production. We label this gender specialisation as separate housework spheres. Empirical evidence strongly confirms separate housework spheres in the GDR, West Germany, subsequent years post-reunification, and in international time-use data across 17 countries since the 1970s. We consider several implications, such as those for child penalties, where separate housework spheres provide a novel explanation for why it is the mothers whose labour market outcomes strongly deteriorate upon the arrival of children.
Strategic Use of Unfriendly Leadership and Labor Market Competition: An Experimental Analysis
(2024)
A significant portion of the workforce experiences what we term `unfriendly leadership,' encompassing various forms of hostile behavior exhibited by managers. The motivations driving managers to adopt such behaviors are insufficiently understood. To explore this phenomenon, we conducted a laboratory experiment examining the relationship between managers' use of unfriendly leadership and labor market competition. We discern two labor market states: excess labor demand, where managers compete to hire workers, and excess labor supply, where workers compete to be hired. By perceiving unfriendly leadership as a performance-contingent punishment device inflicting discomfort on workers, we hypothesize that managers are less inclined to resort to unfriendly leadership when they compete to hire workers. We find that managers tend to engage in unfriendly leadership more frequently and intensely under excess labor supply, in comparison to excess labor demand. This trend is particularly pronounced among male participants. Additionally, workers display a decreased likelihood of accepting employment offers from more unfriendly managers and exert lower levels of effort when working under such managers, indicating that unfriendly leadership is costly.
Based on a seminar organized by LIEPP and CIVICA which took place at Sciences Po in June 2022, this publication brings together ten academic researchers from seven different CIVICA universities (Bocconi, CEU, EUI, Hertie School, LSE, Sciences Po, SNSPA), who are involved in various forms of policy evaluation. These contributions from Austria, France, Germany, Hungary, Italy, Romania, and the United Kingdom, reflect on the assets and challenges of developing policy evaluation in an academic setting. The seminar was organized as part of CIVICA’s research focus on “Democracy in the 21st century”, but through the crosscutting nature of program evaluation, it is also of interest to CIVICA’s three others research streams (on societies in transition, data, and Europe revisited). The aim of this debate is thus to better understand the specificities, assets and challenges of developing evaluation from within an academic setting, in view of eventually reflecting on possible ways to collectively reinforce this practice within CIVICA, and use CIVICA as a leverage to reinforce this practice. This debate is organized around two topics, developing academic evaluative research, and the role of academic institutions in outreach and training in evaluation. Contributions are based on presentations of the experiences of each CIVICA partner.
Grand Challenge Initiatives in AI for Climate & Nature: Landscape Assessment and Recommendations
(2024)
Between 6-9 July 2024, the 720 members of the European Parliament were elected across 27 Member States. While the elections have not led to a landslide shift to the right, there is a notable consolidation of far-right parties at the European level. Still, the pro-European centre is holding firm and maintains a majority. In this Policy Brief, Jannik Jansen and Thu Nguyen argue that the results likely indicate by-and-large continuity in the European Parliament, including an ongoing shift to the right on contested issues due to a perforated ‘cordon sanitaire’. But the election results had heavily disruptive consequences on the national level, which in France has triggered snap parliamentary elections. This will have pronounced impact on the balance of power in the (European) Council and on the EU as a whole.
Implementing the EU Green Deal requires annual investments of about €620 billion, most of which will have to be shouldered by the private sector. However, businesses and households are not investing enough as of now. An important lever for greater green investment is reducing uncertainty around such investment. At the start of the next institutional cycle, the EU should hence improve regulatory certainty for green investments, which should be palatable to most parties likely to form a majority in the Parliament. In addition, the EU should adopt concrete tools that reduce cost uncertainty for companies and households in a pragmatic manner. To this end, this policy position recommends using green lead markets and proposes moves to explore two novel mechanisms that cost taxpayers little to nothing but should boost green investments.
We demonstrate how the incentives of firms that partially own their suppliers or customers to foreclose rivals depend on how the partial owner can extract profits from the target. Compared to a fully vertically integrated firm, a partial owner may obtain only a share of the target’s profit but influence the target’s strategy significantly. We show that the incentives for customer and input foreclosure can be higher, equal, or even lower with partial ownership than with a vertical merger, depending on how the protection of minority shareholders and transfer price regulations affect the scope for profit extraction.
Election campaigns are increasingly conducted online. Social media platforms in particular shape political discourse and facilitate new ways of delivering political messages. This was initially considered a boon for democracy, but opaque manipulation tactics quickly turned it into a threat to fair and transparent elections. National regulatory frameworks have often proved to be inadequate for online campaigns and the transnational nature of European elections. The EU has reacted to this with a regulation on political advertising. The initiative facilitates transnational campaigning online and aims to protect the integrity of European elections. The 2024 European elections will be the first time EU rules operate in this area, putting these to the test. This election cycle will indicate whether political actors are striking out for more cross-border campaigns and whether they suffice to protect European elections. Critical here is how online platforms implement the new rules and how transparent they are about campaign-related posts on their sites.
EU enlargement has historically fostered economic growth and political stability. In the Western Balkans, however, the process has stalled for many years due to the myriad crises afflicting the EU and failure to deliver reforms in the Western Balkans. This policy brief examines the evolution of the EU accession process, the challenges faced by candidate countries, and the need for a revitalized approach that builds reforms into the accession process rather than keep them a precondition for kickstarting it. It calls for the EU to remove bilateral disputes from the process and open accession talks with all candidate countries in all areas covered by the acquis, ensuring that all candidate countries have a fair chance based on their merits.
The average revenue, or market value, of wind and solar energy tends to fall with increasing market shares, as is now evident across European electricity markets. At the same time, these markets have become more interconnected. In this paper, we empirically study the multiple cross-border effects on the value of renewable energy: on one hand, interconnection is a flexibility resource that allows to export energy when it is locally abundant, benefitting renewables. On the other hand, wind and solar radiation are correlated across space, so neighboring supply adds to the local one to depress domestic prices. We estimate both effects, using spatial panel regression on electricity market data from 2015 to 2023 from 30 European bidding zones. We find that domestic wind and solar value is not only depressed by domestic, but also by neighboring renewables expansion. The better interconnected a market is, the smaller the effect of domestic but the larger the effect of neighboring renewables. While wind value is stabilized by interconnection, solar value is not. If wind market share increases both at home and in neighboring markets by one percentage point, the value factor of wind energy is reduced by just above 1 percentage points. For solar, this number is almost 4 percentage points.
During campaigns for legislative elections, a large portion of the general public follows televised debates between the front-running candidates. How can the candidates use the public interest in the debates to increase the support for their party? In this article, we argue that especially challenger candidates can improve the public perception of their valence qualities, such as personal integrity, leadership, and competence, and can - as a result - improve the support of their parties. We expect the perceived policy stances of the candidates to matter less, as parties often already have well-defined policy profiles that matter to voters. Building on televised debate experiments during the German Federal Elections of 2009 and 2013, we analyse the effect of the debates on party vote and in how far this relationship is mediated by changes in valence and policy evaluations of the candidates. Results show that changes of candidate valence, but not changes in policy perceptions, of the social-democratic front-running candidates mediate the vote intention for the party. Respondents who perceived the candidates more competent, empathetic and have integrity as a result of the debate are more likely to vote for their party. Our analysis further reveals, however, that this valence effect does not carry-over to vote intention briefly before the election.
Residential buildings directly contribute 11% to local greenhouse gas emissions and up to 40% of total emissions when accounting for energy use for electricity generation. In order to achieve the climate targets in line with the Federal Climate Protection Act, increased ambition level of climate policy instruments is required in this sector. In this research, we are interested in the governance of this sector and the role of evaluation: the government-mandated processes used to evaluate policy in terms of the actors, organisations and ministries involved in executing and coordinating these processes; and the metrics and methods as well as the scope and granularity of evaluations.
The report follows a mixed methods research design, utilising multiple sources of primary data for triangulation. We combine 14 expert interviews with content analysis of published reports to investigate the quality and scope of the current evaluation procedures in place. Building on institutional and evaluation literatures, the research offers an enhanced understanding of the content, scope and processes of ex-post evaluation of policy instruments.
Across industrialized countries, regional disparities in labor market outcomes and income have increased in recent decades. This paper investigates how one of the largest localized labor demand shocks tied to the beginning of de-industrialization- the decline of the mining industry between 1960 and 2010 - affects labor market outcomes in the long run. The analysis relies on a new panel data set based on digitized census records from Belgium, France, the UK, and Germany that allows to trace labor market adjustments over 60 years for the male and female working-age population separately. For the causal estimation, I use an IV-shift share approach that exploits exogenous variation in the shifts induced by increased seaborne trade of energy substitutes and the share given by geological rock strata to predict mining activity. The male population disproportionately suffered under this (early) de-industrialization shock and the subsequent job loss. For the male population, the employment-population ratio has not yet recovered resulting in persistent local joblessness. In contrast, the female working-age population experienced a strong catch-up in employment and participation. I find that at the aggregate level, a substantial, albeit time-lagged population response paired with a strong increase in female participation rates fully compensate for the loss of male jobs over the decades. As a consequence, the male-female employment gap shrinks over time.
Narrative Persuasion
(2024)
We study how one person may shape the way another person interprets objective information. They do this by proposing a sense-making explanation (or narrative). Using a theory-driven experiment, we investigate the mechanics of such narrative persuasion. Our results reveal several insights. First, narratives are persuasive: We find that they systematically shift beliefs. Second, narrative fit (coherence with the facts) is a key determinant of persuasiveness. Third, this fit-heuristic is anticipated by narrative-senders, who systematically tailor their narratives to the facts. Fourth, the features of a competing narrative predictably influence both narrative construction and adoption.
Social interactions predominantly take place under the shadow of the future. Previous literature explains cooperation in indefinitely repeated prisoner’s dilemma as predominantly driven by self-interested strategic considerations. This paper provides a causal test of the importance of social preferences for cooperation, varying the composition of interactions to be either homogeneous or heterogeneous in terms of these preferences. Through a series of pre-registered experiments (N = 1,074), we show that groups of prosocial individuals achieve substantially higher levels of cooperation. The cooperation gap between prosocial and selfish groups persists even when the shadow of the future is increased to make cooperation attractive for the selfish and when common knowledge about group composition is removed.
Depression Stigma
(2024)
Throughout history, people with mental illness have been discriminated against and stigmatized. Our experiment provides a new measure of perceived depression stigma and then investigates the causal effect of perceived stigma on help-seeking in a sample of 1,844 Americans suffering from depression. A large majority of our participants overestimate the extent of stigma associated with depression. In contrast to prior correlational evidence, lowering perceived social stigma through an information intervention leads to a reduction in the demand for psychotherapy. A mechanism experiment reveals that this information increases optimism about future mental health, thereby reducing the perceived need for therapy.
The European Union (“EU”) and India, two of the most significant jurisdictions in the world, are in the process of introducing transformative legal and policy instruments that seek to leverage digital technologies for health. On 15 August 2020, India unveiled its National Digital Health Mission policy - later rolled out as the Ayushman Bharat Digital Mission (“ABDM”) - that seeks to create an open, interoperable digital health ecosystem in the country, enabling various digital health systems to engage with each other and empower individuals to be in control of their health data. On the other hand, on 3rd May 2022, the EU released a proposal for a regulation for a European Health Data Space (“EHDS”) to address health-specific challenges to electronic health data access and sharing and create a common space where natural persons can easily control their electronic health data.
However, considering these jurisdictions' geographical, cultural, and historical dispositions, various concerns emerge that may cause hindrance to these projects. While the EU has demonstrated its highlyadvanced approach towards policy-making in data-relevant domains, including health, India has showcased its efficiency and experience in scaling data systems and making them interoperable. Accordingly, this research paper highlights certain specific policy- and implementation-level concerns that both jurisdictions need to pay heed to while going ahead with their respective projects. Additionally, after studying the various digital healthcare ecosystems in these jurisdictions, the paper makes certain recommendations to work towards a seamless design, development, deployment, and operation of the frameworks.
To accept carbon pricing, citizens desire viable alternatives to fossil-fuel based options. As inflation and higher interest rates have exacerbated access barriers for capital-intensive green substitutes, the political success of carbon pricing will be measured by how well policy design enables consumers to switch.
This chapter presents a microeconomic, behavioral perspective on bounded rationality and beliefs. It begins with an account of how research on belief biases, in particular via probabilistic belief elicitation, has become mainstream in economics only relatively recently and late, even in behavioral economics (aka “psychology and economics”). The chapter then offers a review of the decision-theoretic foundations of modeling and eliciting (subjective) beliefs as probabilities, as well as selected—both classic and recent—evidence on humans’ bounded rationality from related research in psychology and economics. In doing so, it connects the historical debates within decision theory, on the one hand, and within psychology, on the other, concerning the normative status of expected utility and Bayesianism, as well as its methodological implications. A conclusion draws lessons for the practice of belief elicitation and future research.
The first-ever European Defence Industrial Strategy and its financial leg, the European Defence Industrial Programme, saw the light of day in March 2024. The strategy seeks to ameliorate deficiencies in EU defence readiness identified in light of the Russo-Ukrainian war. It offers an ambitious agenda and tailor-made incentives designed to encourage EU member states to invest more, better, together, and European. The Jacques Delors Institute’s Associate Research Fellow Thierry Tardy and the Jacques Delors Centre’s Security Policy Fellow Sascha Ostanina argue that the strategy is a good start to motivate European countries for more action in the defence sector. However, as long as the EU fails to take on a larger defence mandate via treaty change, the strategy success will hinge upon whether the member states, and their respective industrial defence sectors, will be willing to step up to the plate.
While psychotherapy has been shown to be effective in treating depression, take-up remains low. In a sample of 1,843 depressed individuals, we document that effectiveness concerns are top-of-mind when respondents consider the value of therapy. We then show that the average respondent underestimates the effectiveness of therapy and that an information treatment correcting this misperception increases participants’ incentivized willingness to pay for therapy. Information affects therapy demand by changing beliefs rather than by shifting attention. Our results suggest that information interventions that target the perceived effectiveness of therapy are a potent tool in combating the ongoing mental health crisis.
Combined survey and web tracking data have great potential for social-scientific research. They allow linking information on online behavior with data on reported offline behavior, opinions, and attitudes. At the same time, ethical, legal, and technical challenges make it difficult to disseminate linked web tracking data to the scientific community. This whitepaper aims to address these challenges by providing guidance for researchers and archivists, discussing legal, practical, and ethical aspects, disclosure risks, and establishing a framework for publishing web tracking data. Recommendations for best practices are also provided based on experiences from a research project funded by the German Consortium for the Social, Behavioural, Educational and Economic Sciences.
In 2019, Ursula von der Leyen promised a geopolitical Commission. Back then, the proclamation was largely derided as empty rhetoric. However, in recent years, a dizzying number of geoeconomic initiatives have come from Brussels, revising and tweaking existing tools and measures, developing new instruments, and announcing a grand new European Economic Security Strategy. This policy brief examines the progress made and outlines the key challenges for the next Commission. While the current Commission expanded the EU‘s geoeconomic toolbox, the incoming Commission must prioritise harmonisation to prevent fragmentation, allocate substantial funds to enhance resilience, and streamline institutional processes to facilitate coherent policymaking at a European level.
This paper studies a key element of discrimination, namely when stereotypes translate into discriminatory actions. Using a hiring experiment, we rule out taste-based discrimination by design and test for the presence of two types of belief-based gender discrimination. We document evidence of explicit discriminators—individuals who are willing to discriminate even when their hiring choices are highly revealing of their gender-biased beliefs. Crucially, we also identify implicit discriminators—individuals who do not discriminate against women when taking a discriminatory action is highly revealing of their biased beliefs, but do discriminate against women when their biased motive is obscured. Our analysis highlights the central role played by features of the choice environment in determining whether and how discrimination will manifest. We conclude by discussing the implications for policy design.
Provided it is sufficiently regulated, securitisation can help to fund the economy and share risks within the monetary union. Securitisation combines the advantages of banks in lending and of financial markets in financing. However, a lack of standardisation and legal harmonisation currently prevents the EU from reaping the benefits of this instrument. Weakening the prudential framework will not create a truly European market but may pose new risks to financial stability. Instead, this Policy Brief argues that to scale up securitisation, overcoming the fragmentation in national contract and insolvency laws in the longer term will be key. In the meantime, the European Commission should cut unnecessary red tape and establish an EU-wide standardised securitisation product tailored to an asset class that shows sustainable growth potential. Renovation loans are a promising option.
This paper studies a key element of discrimination, namely when stereotypes translate into discriminatory actions. Using a hiring experiment, we rule out taste-based discrimination by design and test for the presence of two types of belief-based gender discrimination. We document evidence of explicit discriminators—individuals who are willing to discriminate even when their hiring choices are highly revealing of their gender-biased beliefs. Crucially, we also identify implicit discriminators—individuals who do not discriminate against women when taking a discriminatory action is highly revealing of their biased beliefs, but do discriminate against women when their biased motive is obscured. Our analysis highlights the central role played by features of the choice environment in determining whether and how discrimination will manifest. We conclude by discussing the implications for policy design.
Transnational Constitutionalism is a sociological given and a legal challenge. We observe the emergence of ever more legally-framed transnational arrangements with ever more power and impact. Does this kind of rule ‘deserve recognition’? Is it at all conceivable that the proprium of law can be defended against the rise of its informal competitors? This essay opts for a third way which neither listens to the siren songs on law beyond the state nor to the defences of nation-state constitutionalism as the monopolist of legitimate rule. The alternative submitted suggests that transnational legal ordering of the EU should build upon its re-conceptualisation as a ‘three-dimensional conflicts-law’ with a democracy-enhancing potential. This re-construction operationalises the ‘united in diversity’ motto of the Draft Constitutional Treaty of 2004. It preserves essential accomplishments of Europe’s constitutional democracies. It provides for co-operative problem-solving of transnational regulatory tasks, and it retains supervisory powers over national and transnational arrangements of private governance.
How do households perceive the forecasting performance of the central bank? Using two novel experiments embedded in the Bundesbank's Survey on Consumer Expectations (total $N=9500$), this article shows that the majority of German households underestimate the ECB's inflation forecasting accuracy. In particular, they believe that the ECB is overly optimistic. Communication that challenges these perceptions improves the anchoring of inflation expectations, reduces inflation uncertainty and discourages consumption of durable goods. Treated households also report higher trust in the ECB, perceive the ECB's inflation target as more credible, the ECB's communication as more honest, and the ECB's policy as more beneficial to them. Finally, the causal effect of central bank trust on inflation expectations is quantified using instruments to deal with endogeneity.
This working paper aims to examine the ‘displacement regime complex’, displacement referring to both internally and externally displaced persons, taking into account the competing roles of UNHCR and IOM in both spheres of activity. The title of the paper ‘Reform for protection’, aims to outline institutional reforms that aim to increase protection for the displaced, informed by binding universal human rights standards, and institutional principles relating to accountability and participation of most affected populations.
This report explores the refugee recognition regime in Niger. Quantitatively, Niger is the most important transit and refugee host country in West Africa. Niger is also at the forefront of debates on migration management in the region, as it is presented by International Organisations and states of the Global North as an alternative destination to the limited refugee protection in Libya and North Africa. Against the background of a relative dearth of literature on refugee recognition regimes (RRR) in (West) Africa and generally the Global South, this study draws on ethnographic field research and desk research to analyse the norms, institutions, modes of recognition, quality of recognition processes and of protection in Niger. This report’s research was completed in July 2021 and except a few data points, does not include any developments thereafter.
The notion of a broad green backlash is set to dominate this year's European election campaign. Based on new survey data from more than 15.000 respondents in Germany, France and Poland, we show that it is largely overblown. A majority of voters still wish for a more ambitious climate policy and would support a raft of concrete measures to bring down emissions. However, supporting pivotal voters in the middle will require a stronger focus on green investment and industrial policy and offsetting measures for effective but unpopular policies like carbon pricing. Parties should not waste the coming months outbidding each other over how to cater to imagined climate fatigue but compete over concrete recipes to green the economy.
The Political Economy of Stranded Assets: Climate Policies, Investments and the Role of Elections
(2024)
We study the interaction of climate policies and investments into fossil and renewable energy generation capacity if policies are set by democratically elected governments and can lead to stranded assets. We develop an overlapping generations model, where elections determine carbon taxation and green investment subsidies, and individuals make investments into fossil and renewable capacity. We find that some fossil investments become stranded assets, if the party offering the higher carbon tax is unexpectedly elected. In contrast, if the individuals have perfect foresight, there are no stranded assets, climate damages are fixed and carbon taxation only serves redistributive purposes. Then, there is either no or prohibitive carbon taxation and energy generation completely relies on renewables in the latter case. Green investment subsidies can be used by governments to bind the hands of their successor. If the party representing the young generation is in power, it can use a high subsidy to reduce or even avoid potentially stranded assets in the next period. With endogenous reelection probability, we show that this party can also use investment subsidies strategically to influence the elections. The party that represents the old generation abstains from both types of climate policies to avoid a redistribution of income towards the young generation.
The Net Zero Industry Act (NZIA) was touted as the EU‘s big response to the US Inflation Reduction Act. After a year of negotiations, it will finally hit the legislative books. In his policy position, Nils Redeker analyses what has become of the EU‘s green industrial policy ambitions, what the NZIA teaches us about Europe‘s role in the clean tech race, and what the next Commission needs to do to formulate a constructive answer to the global return of industrial policy.
To achieve some recent EU priorities, such as boosting clean tech manufacturing, reducing energy prices, or strengthening economic resilience, policy makers are intervening more actively in the economy. Getting these types of policies right requires a thorough understanding of the respective business environment, technologies, and market developments. This policy brief argues that the EU level lacks the data and the analytic capacities that are needed to achieve this understanding. The next EU Commission should address these shortcomings by collecting more data in the narrow areas subject to vertical government intervention, by improving how data gets collected, and by dedicating more staff to data-driven analyses.
The sharp increase in inflation across Europe over the last two years has led to calls from some actors for a policy of wage restraint to prevent a vicious circle of price rises. Yet as Martin Höpner, Anke Hassel and Donato Di Carlo write, the fact that “wage restraint” can be understood in multiple different ways has created confusion about the link between wages and prices.
Executive Summary:
▪ The German government has taken decisive actions in response to the dual economic shocks linked to the Covid-19 pandemic and Russian gas supplies’ cut-off – with the main objective of protecting its export-oriented industrial economy.
▪ By engaging in "competitive corporatism," the coalitional government has worked closely with the social partners – especially representatives from the chemical and metalworking-engineering export sectors – to restore domestic firms’ cost competitiveness while providing social compensation to vulnerable households and individuals.
▪ The government's concerted threefold strategy to uphold the export-led growth regime includes: (1) measures aimed at reducing firms’ energy costs; (2) in/direct measures aimed at controlling the rise of labour costs to prevent a wage-price spiral; (3) substantial state aid provided to ailing firms.
▪ The scope of state intervention in Germany's economy is unparalleled, entailing significant fiscal outlays for protective measures, made possible by Germany’s advantageous sovereign refinancing capacity. Germany’s economic activism risks jeopardising the EU single market due to extensive state aid, especially since Germany resists joint fiscal resource pooling for EU-wide industrial policy.
Eine Teilung des deutschen Marktgebietes würde die Marktwerte erneuerbarer Energien beeinflussen. Wind und Photovoltaik (PV) im Süden Deutschlands würden an Wert gewinnen, während Erneuerbare im Norden Erlöse einbüßen würden. Bei einer auch zukünftig stärkeren Konzentration von erneuerbaren Energien im Norden bedeutet dies insgesamt einen höheren Förderbedarf für PV – Wind wäre trotz niedriger Marktwerte in den meisten Regionen wirtschaftlich. Wenn eine regionale Steuerung erreicht werden soll, müsste die auszuzahlende Förderung für neue PV-Anlagen anhand des zonenübergreifenden Referenzmarktwertes berechnet werden. Durchschnittliche Börsenstrompreise würden durch eine Gebotszonenteilung im Süden Deutschlands leicht angehoben und im Norden gesenkt, die Effekte auf Endkundenpreise und damit verbundene Anreize zur Standortwahl von Industrieunternehmen sind allerdings als gering einzuschätzen.
Politicians don’t dance? AI doesn’t either!: A discussion of generative AI and political campaigning
(2023)
This policy brief delves into the potential of regular migration across diverse skill levels to alleviate labour shortages in the EU. It contends that the EU faces a policy dilemma by attempting to curtail certain migration forms, as seen in the recent Common European Asylum System (CEAS) reform, while concurrently encouraging others through initiatives like the EU Talent Pool. The inconsistent approach to third-country migration poses significant trade-offs, necessitating a comprehensive resolution. The brief advocates for a multi-faceted strategy encompassing (a) diversification, (b) integration, and (c) de-bureaucratization at both EU and member state levels. Addressing potential pitfalls such as brain drains and heightened competition among member states, the brief concludes by highlighting three essential criteria for enhancing talent attraction and mitigating EU labour shortages through both high- and low-skilled migration.
The 2024 European elections could mark a turning point in EU politics: The European Parliament has traditionally been a progressive force in EU policymaking, often pushing for more far-reaching, European solutions than the Council. This dynamic could fundamentally change after the 2024 elections, with the current power balance expected to shift in favour of more right-wing forces. But even without a turn towards a Eurosceptic majority, the outcome will determine the direction of policies decided by the Parliament and shape EU politics over the next five years. This policy brief offers an overview of the need-to-know for this election year. First, it details the institutional timeline until the end of the current legislative cycle. Second, it provides an overview of how European political parties are approaching the election campaign. Third, it discusses election day, possible new majorities in Parliament and inevitable institutional haggling over key positions. Finally, it describes the missed reform opportunities since the 2019 elections and how this may undermine the integrity of the June poll.
Between 2018 and 2022, Montenegro introduced a series of significant policy reforms. The reforms affected economic, educational, and social policies, ranging from the introduction of a universal child allowance to major changes in its labour market regulations and tax rules. From an economic policy perspective, the most significant reform package was implemented in January 2022.
It was composed of a huge increase in Montenegro’s statutory minimum wage, alongside a new income tax regime and the abolishment of mandatory health insurance contributions. According to the Government, the reform package aimed at increasing the living standards of citizens and promoting a more sustainable and inclusive growth model.
This report evaluates the conjoint impact of this reform package.
This paper studies how the swiftness and delay of punishment affect behavior. Using rich administrative data from automated speed cameras, we exploit two (quasi-)experimental sources of variation in the time between a speeding offense and the sending of a ticket. At the launch of the speed camera system, administrative challenges caused delays of up to three months. Later, we implemented a protocol that randomly assigned tickets to swift or delayed processing. We identify two different results. First, delays have a negative effect on payment compliance: the rate of timely paid fines diminishes by 7 to 9% when a ticket is sent with a delay of four or more weeks. We also find some evidence that very swift tickets – sent on the first or second day following the offense – increase timely payments. These results align with the predictions of expert scholars that we elicited in a survey. Second, speeding tickets cause a strong, immediate, and persistent decline in speeding. However, we do not detect any robust, differential effects of swiftness or delay on speeding. This challenges widely held beliefs, as reflected in our survey. Yet, we document large mechanical benefits of swift punishment and provide a theoretical framework of learning and updating that explains our findings.
This paper explores the refugee recognition regime in Egypt, a major host of refugees in the Middle East and North Africa region and one of UNHCR’s largest refugee status determination operations. Although the situation of refugees in Egypt has been the subject of significant study, this paper seeks to address, through a desk-based study, the nature and performance of the refugee recognition regime in Egypt, in particular the norms, institutions, modes of recognition, quality of recognition processes and quality of protection that is available to refugees in Egypt. The main findings are detailed in this executive summary.
The EU is discussing better regulation. The issue is urgent. Nothing less than the competitiveness of European companies and the acceptance of the EU are at stake. But beware – neither symbolic politics nor broad deregulation will help. Instead: here are four concrete measures that could substantially improve the quality of EU regulation.
Energy-intensive industries in the EU are facing two main challenges: high energy prices and transitioning to decarbonised production. However, there is as yet no convincing EU-wide strategy for this sector‘s future. Given that the spectre of ‘deindustrialisation’ has triggered a readiness to act among the member states, there is a window of opportunity for designing such a strategy and putting it on the next Commission‘s agenda. This strategy must go beyond lowering energy prices, and factor in that cost pressures on industry to relocate will persist even in the long run, that the economic and resilience value of domestic production is lower than often portrayed, and that industrial decarbonisation is not just an EU but a global must. This policy brief delves into the economic, resilience and climate dimension of supporting energy-intensive industry, aiming to colour in contours of a potential strategy, and suggesting initial policy steps the EU should take.
We introduce political salience into a canonical model of attacks against political regimes, as scaling agents’ expressive payoffs from taking sides. Equilibrium balances heterogeneous expressive concerns with material bandwagoning incentives, and we show that comparative statics in salience characterize stability. As main insight, when regime sanctions are weak, increases from low to middling salience can pose the greatest threat to regimes – ever smaller shocks suffice to drastically escalate attacks. Our results speak to the charged debates about democracy, by identifying conditions under which heightened interest in political decision-making can pose a threat to democracy in and of itself.
We cast mechanism design with evidence in the framework of Myerson (1982), whereby his generalized revelation principle directly applies and yields standard notions of incentive compatible direct mechanisms. Their specific nature depends on whether the agent's (verifiable) presentation of evidence is contractually controllable, however. For deterministic implementation, we show that, in general, such control has value, and we offer two independent conditions under which this value vanishes, one on evidence (WET) and another on preferences (TIWO). Allowing for fully stochastic mechanisms, we also show how randomization generally has value and clarify to what extent this value vanishes under the common assumption of evidentiary normality (NOR). While, in general, the value of control extends to stochastic implementation, neither control nor randomization have any value if NOR holds together with WET or TIWO.
Despite a broad consensus in the EU on the necessity of enlargement, it is far from a done deal. Especially the financial implications a Ukraine accession pose uncertainties. In our policy paper, Johannes Lindner, Thu Nguyen and Romy Hansum show that the next enlargement round would have less of an impact on the EU budget than is generally assumed. This is largely because the EU’s multiannual financial framework (MFF) has inherent adaptation mechanisms to mitigate significant fluctuations. At the same time, we stress that is impossible to predict precisely what the EU’s MFF, under which accession will happen, will look like as the rules and allocations are subject to political negotiations. Lastly, enlargement is not the only issue adding pressure on the EU budget in a Union that faces huge challenges.
Europe’s climate and green industrial policies have faced criticism over lack of funding and coordination, but a shortage of skilled workers could be the key stumbling block for meeting the EU’s green ambitions. This policy brief shines a light on the challenges posed by this shortage. First, it provides an overview of the EU’s aspirational clean tech objectives. Second, it seeks to present a more nuanced perspective on the specific skill and labor requirements for producing and deploying key clean technologies, by providing an initial estimate for the workforce needed to meet the Union’s climate and industrial targets by 2030. Finally, it delves into the factors contributing to potential labor market bottlenecks and underscores the urgent need for targeted and coordinated policy actions.
A European Green Deal that can withstand external shocks and navigate the twists and turns of geo-politics rests on diversified sources of critical imports. However, diversification is a matter for corporate decisions on where to find supplies and place investment and European firms, grappling with cost-push inflation, are reluctant to bear the costs these entail. In this policy position, Francesco Findeisen makes three suggestions about how the EU can help its firms achieve economic resilience through conditional industrial policy support and public procurement.
Cities increasingly address climate change, e.g. by pledging city-level emission reduction targets. This is puzzling for the provision of a global public good: what are city governments’ reasons for doing so, and do pledges actually translate into emission reductions? Empirical studies have found a set of common factors which relate to these questions, but also mixed evidence. What is still pending is a theoretical framework to explain those findings and gaps. This paper thus develops an abstract public choice model. The model features economies of scale and distinguishes urban reduction targets from actual emission reductions. It is able to support some stylized facts from the empirical literature and to resolve some mixed evidence as special cases. Two city types result. One type does not achieve its target, but reduces more emissions than a free-riding city. These relations reverse for the other type. The type determines whether cities with lower abatement costs more likely set targets. A third type does not exist. For both types, cities which set targets and have higher private costs of carbon are more ambitious. If marginal net benefits of mitigation rise with city size, then larger cities gain more from setting climate targets. Findings are contrasted with an alternative model where targets reduce abatement costs. Some effects remain qualitatively the same, while others clearly differ. The model can thus guide further empirical and theoretical work.
Current security guarantees for Ukraine range from unavailable to ineffective, writes Sascha Ostanina. She proposes a middle-ground solution to provide collective security for Ukraine through a binding self-defence agreement between the EU and Ukraine. Such an agreement would provide Ukraine with access to weapons and ammunition in the event of Russian aggression.
The purpose of this working paper is to conduct a comprehensive review of existing literature that explores the relationship between business organizations and democracy. This review draws from various fields, including management, business ethics, sociology, international law, and other relevant disciplines for this Project and has several objectives. Firstly, it aims to provide insight into prior research on how democratic institutions regulate economic actors and how these actors, particularly large multinational corporations (MNCs), resist such regulation. Additionally, it examines how these economic actors develop behaviors and economic models that pose challenges to democratic governance, such as business-related human rights violations. In the initial part of the review, we delve into the historical and contemporary aspects of the relationship between business and democracy. Furthermore, the report explores how companies can contribute to shaping a more democratic future by addressing gaps in governance, especially in cases where populist governments fail to protect the rights of their citizens. It also considers the development of alternative business models, such as social enterprises and cross-sector partnerships. Moreover, it looks into how businesses can actively engage in democratic governance and promote principles of participation. The final section of the working paper involves a bibliometric analysis, including co authorship, co-citation, and keyword co-occurrence maps. This analysis is based on key references used by team members in their literature reviews and is designed to examine the connections that exist among various strands of research that support the research questions of the Rebalance Project.
The Present and the Future of Infringement Proceedings: Lessons Learned from Kavala v. Türkiye
(2023)
The Council of Europe is headed to its fourth summit under the shadow, most likely, of the unimplemented infringement proceedings judgment in the case of Kavala v. Türkiye. The aim of this article is to investigate what this persistent non-implementation teaches us for the present as well as for the future reform of infringement proceedings monitoring. Strengthening this is of inestimable importance for the future credibility of the Council of Europe, as well as the authority of the European Court of Human Rights in general. The lack of a clear strategy for handling non-implementation of infringement proceedings will have a dissuasive effect on the further use of such proceedings by the Committee of Ministers, it removes any teeth proceedings were ever intended to have. In this article I argue that the future of the effective monitoring of judgments resulting from infringement proceedings depends on: a) the foreseeable proceduralisation of the mechanisms to exert pressure on non-implementing states and, b), further judicialisation of the ECtHR’s handling of the remedies required to implement judgments resulting from infringement proceedings. In conclusion, I reflect on possible objections to this double call of proceduralisation and judicialisation as the basis of reform.
This report focuses primarily on the actions of the United Nations High Commissioner for Refugees (UNHCR) because of its central and contested role in refugee protection. Drawing on primary and secondary data, it reviews how UNHCR has developed a range of protection interventions, some non-ideal, in response to the actions of state and non-state actors who maintain a hostile environment for migrants with irregular status.
This working paper examines the European Union's (EU) strategic partnerships with International Organisations (IOs) in dealing with different crises. Through the lens of three distinct case studies, it investigates the EU's collaboration with the United Nations in addressing the Mali crisis, its joint efforts with NATO in response to the Russian war of aggression against Ukraine, and its partnership with the African Union in the context of climate change.
Individuals vary considerably in how much they earn during their lifetimes. This study examines the role of the tax-and-transfer system in mitigating such inequalities, which could otherwise lead to disparities in living standards. Utilizing a life-cycle model, we determine that taxes and transfers offset 45% of lifetime earnings inequality attributed to differences in productive abilities and education. Additionally, the system insures against 48% of lifetime earnings risk. Implementing a lifetime tax reform linking annual taxes to previous employment could improve the system’s insurance capabilities, albeit at the cost of a lower employment rate.
We analyze how machine learning predictions may improve antibiotic prescribing in the context of the global health policy challenge of increasing antibiotic resistance. Estimating a binary antibiotic treatment choice model, we find variation in the skill to diagnose bacterial urinary tract infections and in how general practitioners trade off the expected cost of resistance against antibiotic curative benefits. In counterfactual analyses we find that providing machine learning predictions of bacterial infections to physicians increases prescribing efficiency. However, to achieve the policy objective of reducing antibiotic prescribing, physicians must also be incentivized. Our results highlight the potential misalignment of social and heterogeneous individual objectives in utilizing machine learning for prediction policy problems.
The EU Military Assistance Mission in Support of Ukraine (EUMAM UA) is designed to support Ukraine’s army in its fight against Russia’s invasion. A two-year mission envisions training 40,000 Ukrainian soldiers on Western weapons systems and aims to maximise the utility of military assistance provided to Ukraine by its international partners. Can EUMAM UA provide Ukraine with a decisive advantage that wins the war? In this policy brief, Sascha Ostanina argues that EUMAM UA requires a longer mandate for Ukrainian troops to overcome real-life constraints. Consequently, the training mission’s cumulative impact can turn EUMAM UA into one of the key components of Ukraine’s battlefield successes. To increase its cumulative impact, the EU should also standardise the content of EUMAM UA courses and merge EUMAM UA with other EU military aid measures set up for Ukraine.
The EU's supply chains for critical raw materials are heavily concentrated in a handful of countries, notably China. This exposes the European Green Deal Agenda to the twists and turns of geopolitics and external shocks, while the net-zero transition will add to global resource requirements. To diversify the sources of its supplies, the EU intends establishing a Critical Raw Materials Club—a forum where resource-hungry and resource-rich countries collaborate in diversifying critical raw materials value chains. This policy brief outlines the challenges the EU faces in setting up such a Club and discusses options for designing an effective model. It concludes that a hybrid version, one that starts with voluntary commitments, minimal structure, and a limited number of members and becomes more ambitious over time, offers the most promising design solution. However, to succeed with this approach, the EU must make a credible upfront funding commitment at the launch of the Club and streamline its fragmented development finance model.
What Europe needs is not a regulatory pause, but better legislation. In record time, the EU has rolled out a comprehensive disclosure regime for sustainable finance. But the nascent regulatory framework is challenging to implement, remains vulnerable to abuse by those seeking to game the system and fails to provide meaningful guidance to investors. Despite detailed legislation, financial market participants differ significantly in their expectations of sustainable investment products and face the risk of greenwashing, where issuers - intentionally or unintentionally - make misleading sustainability claims. To enable private investment to finance Europe’s transition to net zero, this policy brief proposes short-term measures to combat greenwashing plus reforms that should be adopted once the next European Commission has assumed office. For the EU to uphold its status as a global benchmark for sustainable finance, lawmakers and regulators must urgently improve the rules in place and ensure that they are applied consistently across member states.
Die Europäische Union muss sich erweitern, möchte sie ihre unmittelbare Nachbarschaft stabilisieren und dem Einfluss Russlands in der Region vorbeugen. In dieser Policy Position argumentiert Thu Nguyen, dass jedoch sowohl künftige Mitgliedstaaten als auch die EU für die Erweiterung bereit sein müssen. Dazu braucht es Reformen, vor allem in drei Bereichen: Rechtsstaatlichkeit, Handlungsfähigkeit und EU-Haushalt.
The EU struggles to remain internationally competitive, with pressures intensifying since the Russian war in Ukraine. Many factors, most of them long-standing, determine EU competitiveness, such as lack of skilled labour, digitalisation, or quality of infrastructure. A vast literature exists on how to address these issues. This paper takes a narrower approach by focusing on three more recent levers for the EU to ensure its future competitiveness: devising an EU industrial policy, adapting to the changing energy landscape, and positioning the EU in a geopolitically tense environment.
Green growth requires strategy and coordination. The green transition entails important costs and will fail politically if we do not address socio-economic inequalities. In this Policy Position, Cornelia Woll proposes three pathways to a net-zero economy by 2050 that ideally should be combined: (i) correcting market signals through taxonomies and taxation; (ii) developing a European industrial policy that supports green innovation but also rewards successful transition plans; (iii) facilitating the funding for companies and financial institutions lending to those invested in green technology.
Electric vehicles (EVs) are an important option to decarbonize the passenger transport sector and, therefore, critical to be adequately represented in energy system models. One of the main challenges is to model the volatility associated with charging EVs. We provide an overview of existing modeling approaches for this. We especially compare methods for simulating charging profiles and discuss their advantages and disadvantages, depending on the application. On that basis, we pick one simulation approach and generate time series for a case study of Germany in 2030. We assess the results and compare them with a large empirical dataset on EV charging in the UK. We derive recommendations for the future modeling of EVs.
Germany Needs a Europe Pact
(2023)
German Chancellor Olaf Scholz recently presented a new “Germany-Pact” to advance the country, following media reporting that has portrayed Germany as the “sick man of Europe” due to its waning economy. However, as Johannes Lindner and Nils Redeker observe, Europe does not play a big role in this pact. In this op-ed, originally published in Handelsblatt, they explain why Germany should refocus on the EU single market and develop an overall strategy for modernising the country and Europe.
This report discusses the evolution of the refugee recognition regime (RRR) in Kenya, chiefly over the period of 2000-2020. It highlights the government’s responses towards refugee protection, its bifurcated approach towards refugees based on where they reside, the challenges faced by protection seekers in the recognition process, and the shifts in responsibility between the government and UNHCR. The report is based on extensive desk-based research as well as original fieldwork, including interviews and focus group discussions with adult asylum seekers and refugees, as well as officers involved in refugee status determination (RSD) processes. The research targeted refugees and asylum seekers from the top four recognised nationalities in Kenya in the 20-year period: Somalis, South Sudanese, Ethiopians, and Congolese from the Democratic Republic of Congo (DRC).
Despite its increasingly autocratic style of governance, Hungary is set to take over the Presidency of the Council of Ministers in the second half of 2024, Martijn van den Brink (Jacques Delors Centre, Hertie School of Governance) writes in his CEU DI Working Paper.
Since doubts exist about the country’s capacity to exercise the responsibilities that come with this office, different proposals have been put forward to suspend a Hungarian Presidency. This paper offers a legal and political analysis of these proposals.
First, the author argues that the proposals in their current form are inconsistent with the requirement in Article 16(9) TEU that the Presidency of the Council shall be held by the Member States on the basis of equal rotation. It is in line with this provision to delay a Hungarian Presidency for some time, but not to sanction the country for as long as it continues to violate the rule of law.
Secondly, being mindful of these legal constraints, he questions whether delaying a Hungarian Presidency is a smart choice politically. The choice of delaying a Hungarian Council Presidency is something of a gamble. The analysis suggests it might be better to allow Hungary to chair the Council in the second half of 2024 rather than in several years.
This paper explores the refugee recognition regime in Jordan, the country hosting the second highest number of refugees per capita in the world. Against the background of a relative dearth of literature on refugee recognition regimes – in Jordan and more widely – this desk-based study analyses the norms, institutions, modes of recognition, quality of recognition processes, and quality of protection of the Jordanian refugee recognition regime. It focuses on the four key national ‘cohorts’ – Iraqis, Sudanese, Syrians and Yemenis.
This paper studies a recent legal reform in Germany, which aims to lower commission rates of real estate agents by raising the cost salience of sellers. I find that the reform has backfired and real estate agents have exploited the transition to increase their commission rates. The findings document that in some regions real estate agents increase their commission by up to 2 percentage points, adding over € 6,000 in transaction cost to the average home sale. As explicit collusion is unlikely in this setting, I argue that this arbitrary increase points to seller ignorance instead. To verify if and why sellers fail to induce price competition, I run a pre-registered survey experiment with 1,062 real estate agents. Although commission rates should be negotiated independently for each sale, the survey confirms that 85% of sellers do not attempt to negotiate lower commission rates. The randomized experimental questions suggest that real estate agents may cater to the low willingness of sellers to negotiate by providing misleading reference commission rates and shrouding the economic incidence for sellers.
Digital technologies have substantial environmental impacts. The EU’s 2022 Digital Services Act (DSA) requires the largest platforms and search engines to regularly assess “systemic risks” to various social interests – including public health, physical wellbeing, security, and fundamental rights – and to reasonably and proportionately mitigate these risks. Climate change and other escalating environmental crises severely threaten these interests. Accordingly, this policy brief argues that the DSA requires these companies to take reasonable measures to reduce their environmental impacts.
This should notably include following best practices to minimise energy and water usage, including “sustainability by design” obligations to pursue less energy- and resource-intensive technologies, design choices, and business practices wherever possible. It should also include measures addressing platforms’ indirect environmental impacts, such as the facilitation of environmentally-damaging behaviour by third-party businesses. Since the DSA’s risk mitigation obligations apply specifically to the largest platforms – which exercise significant influence over broader technological and commercial ecosystems – regulatory pressure on these companies to take such measures could have outsized environmental benefits.
This policy brief by Rachel Griffin, PhD candidate at Sciences Po Law School, offers a legal analysis of the DSA’s relevance to environmental policy and explains why environmental risks are within its scope. It then outlines appropriate measures to mitigate platforms’ direct and indirect environmental impacts. It concludes with recommendations for platform companies, regulators, and civil society on how to realise the Digital Services Act’s potential to help secure a more sustainable tech industry.
We use German administrative and survey data to investigate the heterogeneity of part-time penalties in hourly wages and growth rates. Exploiting tax reforms for identification, we find substantial heterogeneity in part-time wage penalties from −28.3% to −7.2% compared to full-time. The heterogeneity in wage growth penalties is less pronounced. Both penalties do not decrease linearly with additional working hours. More weekly working hours might result in a higher hourly wage penalty. The shape of the penalties is driven by workers with non-demanding tasks and professions where working around 30 weekly hours is uncommon, and relatively many females work.
This paper studies high-frequency econometric methods to test for a jump in the spread of bond yields. We propose a coherent inference procedure that detects a jump in the yield spread only if at least one of the two underlying bonds displays a jump. Ignoring this inherent connection by basing inference only on a univariate jump test applied to the spread tends to overestimate the number of jumps in yield spreads and puts the coherence of test results at risk. We formalize the statistical approach in the context of an intersection union test in multiple testing. We document the relevance of coherent tests and their practicability via simulations and real data examples.
This paper studies high-frequency econometric methods to test for a jump in the spread of bond yields. We propose a coherent inference procedure that detects a jump in the yield spread only if at least one of the two underlying bonds displays a jump. Ignoring this inherent connection by basing inference only on a univariate jump test applied to the spread tends to overestimate the number of jumps in yield spreads and puts the coherence of test results at risk. We formalize the statistical approach in the context of an intersection union test in multiple testing. We document the relevance of coherent tests and their practicability via simulations and real data examples.
Social media has changed the structure of mass communication. In this paper we explore its role in influencing political donations. Using a daily dataset of campaign contributions and Twitter activity for US Members of Congress 2019-2020, we find that attention on Twitter (as measured by likes) is positively correlated with the amount of daily small donations received. However, this is not true for everybody: the impact on campaign donations is highly skewed, indicating very concentrated returns to attention that are in line with a ‘winner-takes-all’ market. Our results are confirmed in a geography-based causal design linking member’s donations across states.