Newsletter August 2017

The Centre for European Economic Research (ZEW) will be strongly represented at this year’s Annual Conference of the German Economic Association (VfS), set to take place at the University of Vienna from 3 to 6 September 2017. Besides numerous presentations by ZEW researchers, ZEW will also host an information stand at the conference site. This year’s conference focuses on the core topic “Alternative Structures for Money and Banking”. With a total of 18 contributions by ZEW researchers and ZEW Research Associates, the institute will be well represented at the event.

The Centre for European Economic Research (ZEW), the University of International Business and Economics (UIBE), and the Alexander von Humboldt Foundation jointly organised this year's Beijing Humboldt Forum (BHF), which will take place in the Chinese capital on September 16–18, 2017. This year, the forum will focus on topics such as green economy, cultural heritage, clean energy and carbon markets. The BHF aims to strengthen the research cooperation between Germany and China in these fields.

From 14 to 24 August 2017, members of the supervisory committee of the centrally organised Chinese Master’s programme of International Business visited the Centre for European Economic Research (ZEW) to pursue a qualification programme. After two weeks of intensive training, ZEW President Professor Achim Wambach wished the participants farewell in a certificate ceremony.
 

The Centre for European Economic Research (ZEW) presented itself successfully at this year’s 32rd Annual Congress of the European Economic Association (EEA), which took place at the University of Lisbon from 21 to 25 August and ran in parallel with the 70th Annual European Meeting of the Econometric Society (ESEM).
During the five-day event, ZEW researchers held a total of five presentations and two poster sessions, during which they presented recent research results from the fields of labour markets, market design, competition, and corporate taxation.

Increases in income among low-wage earners in Germany are more heavily taxed than that of top earners. This is due to the combination of a number of factors in the tax, contribution and transfer system. This is the result of a recent study carried out by the Mannheim Centre for European Economic Research (ZEW) on behalf of the Bertelsmann Stiftung.

For the Federal Minister of Research Professor Johanna Wanka and her Ministry, the cooperation with China is an “inevitable opportunity”. China is highly committed to promoting scientific excellence. Therefore, research collaborations with China are becoming ever more important. Successful cooperation with Chinese researchers requires, however, careful preparation. To this end, Barbara Hey and Manuel Lauer from the ZEW Service Department “Knowledge Transfer and Qualification Programmes” have compiled a China compendium published by Springer as part of the “essentials” book series.

The newly published essential „China-Kompetenz für Wissenschaftler“ (“China Competence for Researchers”) aims to provide researchers with country-specific socio- and intercultural knowledge that is crucial for research collaborations.

As the upcoming Bundestag elections in Germany draw nearer, state pensions have again become a key issue for the main political parties. While the Social Democratic Party of Germany (SPD) has laid out its own plans for pension reform in their election manifesto, the Christian Democratic Union of Germany (CDU) has suggested the implementation of a cross-party pension commission after the election. One controversial item up for debate are measures to counteract the rise in poverty among the elderly in Germany.

Signed by almost 200 countries, the Paris Climate Agreement represents a milestone in the global fight against climate change. US President Donald Trump recently announced that the United States would withdraw from the climate agreement. The European Union still believes in adhering to the pact and intends to exceed its climate goals. ZEW environmental economist Sebastian Voigt offers his thoughts on the potential impact of the US withdrawing from the agreement and the consequences this might have for global climate policy.

Professor Nicolas de Roos is a visiting researcher at ZEW’s Research Group „Competition and Regulation“ from 21 July to 29 September 2017. He is an associate professor with the School of Economics at the University of Sydney in Australia. His research interests focus on industrial organisation, applied microeconomic theory and dynamic models. During his stay, he studies tacit initiations of collusions in the retail market for gasoline in Perth, Western Australia. Furthermore, he concentrates on developing a model of collusion in which consumers have limited ability to compare rival products. Here he examines the strategic incentives for firms to engage in obfuscation. Nicolas de Roos will hold a ZEW Research Seminar on equilibrium selection in the retail gasoline industry. His research results inform the theory of collusion, with particular relevance for the initiation of collusion and equilibrium selection.

According to the current survey for August (8-23 August 2017), the economic outlook for China has improved again, rising by 4.1 points. The CEP Indicator, which reflects the expectations of international financial market experts regarding China's macroeconomic development over the coming twelve months, is currently at exactly 0.0 points and thus far below the long-term average of 5.0 points.

The ZEW Indicator of Economic Sentiment for Germany fell considerably by 7.5 points in August 2017 and now stands at 10.0 points. The indicator thus remains significantly below the long-term average of 23.8 points. The assessment of the current economic situation in Germany increased slightly by 0.3 points in August. The corresponding indicator now stands at 86.7 points.

Companies with a high degree of digitalisation were less affected by the economic crisis of 2008 and 2009 than companies with a low digitalisation level. This holds particularly for companies in the service sector. These are the findings of a recent study carried out by the Mannheim Centre for European Economic Research (ZEW).

The price of the different energy sources is set to stagnate over the coming six months. This is the result of the latest ZEW Energy Market Barometer, a survey carried out by the Mannheim Centre for European Economic Research (ZEW) among energy market experts. The majority of the surveyed experts expect wholesale prices for electricity (71 per cent), crude oil (77 per cent), natural gas (81 per cent) and coal (79 per cent) to remain stable. The experts’ expectations are, however, quite different when it comes to the price development in the medium term.

Around 75 per cent of the respondents anticipate increases in wholesale electricity prices in the upcoming five years. The survey shows similar expectations for global crude oil prices (67 per cent) and natural gas prices in Germany (63 per cent).

Corporate leniency programmes have become a vital instrument in the fight against cartels in many industrialised countries. Firms involved in cartels can benefit from such leniency programmes, which allow them to receive full or partial immunity from fines imposed by the European Commission in exchange for providing evidence as a chief witness. Whether the fine is reduced or waived entirely depends on the quality of information provided and its value to the specific case. This programme can, however, create incentives for firms involved in price-fixing conspiracies to apply for leniency in exchange for providing evidence, as has been observed in the recent allegations of collusion among German car manufacturers.

In an empirical study, the Mannheim Centre for European Economic Research (ZEW) has investigated how leniency applicants differ from other cartel members who have been fined by the European Commission for cartel infringements.

In order to prevent the residential real estate market from potentially overheating, German law-makers have created a number of what are known as “macroprudential tools” to be implemented in the mortgage market. If these new regulations are actually to be put into practice, however, this should be done with caution. Given the already far-reaching regulation of residential real estate financing and the fact that lending practices are already intended to encourage stability, this could run the risk of crossing the line into over-regulation. These measures could particularly inhibit home-ownership among German households with limited equity but a high regular income looking to buy relatively cheap housing.

The Mannheim Centre for European Economic Research (ZEW) has presented this year’s Heinz König Young Scholar Award to two young researchers. The recipients of the award were Jiekai Zhang from the Centre de Recherche en Économie et en Statistiques (CREST) at the École Nationale de la Statistique et de l’Administration Économique (ENSAE) ParisTech and Bernhard Kasberger from the University of Vienna. Jiekai Zhang was awarded the prize by ZEW in recognition of her research into the effects of regulated TV advertising for both TV viewers and advertisers while Bernhard Kasberger was recognised for his work on the efficiency of mobile communications markets following frequency auctions.

Economic sentiment among companies in the German information economy sector has been largely positive in the second quarter of 2017. The ZEW sentiment indicator is currently at a high level of 67.7 points, signalling that the majority of companies have a positive view of the economic climate in this sector of the economy. This represents an increase of 0.9 points compared to the previous quarter. This is the finding of a survey conducted among firms in the German information economy by the Mannheim Centre for European Economic Research (ZEW) in June 2017.

The Federal Reserve decided to keep its interest rates unchanged in July after it hiked its benchmark rates up to between 1.0 to 1.25 per cent one month ago. The central bank announced it would begin rolling back its massive balance sheet “relatively soon”. However, it still remains unclear when exactly this will be. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Mannheim Centre for European Economic Research (ZEW), offers his view on the Fed’s decision.

Our publications are available for download in PDF format. PDF files can be viewed using for example the Acrobat Reader, which you can download for free at https://acrobat. adobe. com/us/en/acrobat/pdf-reader. html

Carina Neisser
The Elasticity of Taxable Income: A Meta-Regression Analysis

Arne Jonas Warnke
An Investigation of Record Linkage Refusal and Its Implications for Empirical Research

Irene Bertschek; Michael Polder; Patrick Schulte
ICT and Resilience in Times of Crisis: Evidence from Cross-Country Micro Moments Data

Oliver Lerbs; Michael Voigtländer
Ist eine makroprudenzielle Regulierung des deutschen Hypothekenmarktes geboten? (Does the German Mortgage Market Need Macroprudential Regulation?)

Peter Haan, Holger Stichnoth, Maximilian Joseph Blömer, Hermann Buslei, Johannes Geyer, Carla Krolage und Kai-Uwe Müller
Entwicklung der Altersarmut bis 2036 (Development of Old-Age Poverty Until 2036)

Marion Weissenberger-Eibl, Rainer Frietsch, Torben Schubert, Daniel Bachlechner, Bernd Beckert, Michael Friedewald, Christian Lerch und Christian Rammer
Innovationsindikator 2017 (Innovation Indicator 2017)

Wolfgang Polt, Jürgen Streicher, Peter Biegelbauer, Julia Bock-Schappelwein, Bernhard Dachs, Michael Dinges, Matthias Firgo, Silvia Hafellner, Kathrin Hofmann, Jürgen Janger, Agnes Kügler, Karl-Heinz Leitner, Peter Mayerhofer, Michael Peneder, Michael Ploder, Christian Rammer, Sybille Reidl, Helene Schiffbänker, Claudia Steindl, Anna Strauss und Maximilian Unger
Österreichischer Forschungs- und Technologiebericht 2017 (Development of Old-Age Poverty Until 2036)

The Role of Private Banks in the German Economy

Productivity Paradox in the Manufacturing of Machinery and Equipment Industry

Speaker: Prof. Juan J. Dolado (Charles III University of Madrid)
Location of the event: ZEW, Mannheim

Speaker: Prof. Nicolas de Roos (University of Sydney)
Location of the event: ZEW, Mannheim

Location of the event: University of International Business and Economics, Beijing

Location of the event: ZEW, Mannheim

Location of the event: Eltville (Rheingau)

Speaker: Jun. Prof. Dr. Marie Elina Paul (University of Duisburg-Essen)
Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Sascha Steffen (ZEW), Karin Dohm (Deutsche Bank, Global Head of Regulatory Affairs), Prof. Dr. Danuta Hübner (Member of the European Parliament and former Commissioner for Regional Policy), Natacha Valla, PhD (European Investment Bank and CEPII – leading French think tank in international economics)
Moderation: Laura Noonan (Financial Times, London)
Location of the event: Representation of the State of Baden-Württemberg to the European Union, Brussels

Speaker: Professor Claudia M. Buch (Vice-President of the Deutsche Bundesbank)
Location of the event: ZEW, Mannheim

Postdoctoral Researcher for the Research Department „Corporate Taxation and Public Finance“

Picture Credits: news article of 17.08.2017: iStockphoto.com/choness, news article of 15.08.2017: SpringerGabler 2017, press release of 15.08.2017: istockphoto.com/Easyturn, press release of 07.08.2017: iStockphoto.com/TebNad, press release of 31.07.2017: PantherMedia/zhuzhu,press release of 28.07.2017: iStockphoto.com/martin-dm
 
All further pictures: ©ZEW