Newsletter June 2018

In the second quarter of 2018, the German Real Estate Finance Index (DIFI) continues its downward trend. Falling by 0.4 points, the DIFI indicator now stands at minus 8.2 points. This drop can be attributed to a less favourable assessment of the financing situation which caused the corresponding indicator to fall by 9.5 points. With a current reading of 0.6 points, the indicator remains only slightly above zero.
 

Triumphalism and harsh criticism seem to go hand in hand in any discussion of blockchain technology. For instance, while the EU’s digital commissioner Marija Gabriel sees great opportunity for more efficient public administration through blockchain, the head of the International Monetary Fund (IMF), Christine Largarde, has raised concerns over the technology’s use in money laundering and in financing terrorist groups. This discussion has largely been motivated by a recent boom in investment in blockchain technology, with private investors getting involved alongside professional venture capitalists. ZEW researcher Dominik Rehse casts a sceptical eye over the recent hype around this new technology.

On 21 and 22 June 2018, ZEW hosted the 16th conference on the “Economics of Information and Communication Technologies”, a renowned international event organised by the ZEW Research Department “Digital Economy”. The conference has long been considered one of the most important scientific conferences in the field of digital economy. This year, around 75 international researchers discussed recent research findings on the economics of information and communication technologies.

The Eurogroup has agreed to release a fifth and final loan tranche of 15 billion euros to Greece. In addition, the Greek government has been granted an extension for the repayment of its loans as well as interest rate cuts so as to ensure the country’s debt sustainability in the coming years. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), offers his view on the matter.

The high school teams from the Southwest that will advance to the national final of the YES! – Young Economic Summit have been decided. The winning teams from the Fritz Erler Schule Pforzheim, the Otto Schott Gymnasium Mainz and the Saarpfalz Gymnasium Homburg impressed at the regional final held at the Centre for European Economic Research (ZEW) in Mannheim, where they faced stiff competition from five other teams.

As expected, the European Central Bank (ECB) has not made any changes to its interest rate policy in its latest decision. However, it has now set a timetable for phasing out its asset purchase programme. The ECB expects to halve its net asset purchases to 15 billion euros per month as of October as well as to discontinue them completely by the end of the year. This latest decision is, however, subject to the condition that incoming inflation data matches the ECB’s inflation expectations. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), offers his view on the matter.

How can markets be designed in an efficient way? How should feedback be provided on crowdsourcing platforms so as to achieve the best possible results? In what way can lotteries contribute to equal opportunities and a greater efficiency in the allocation of school places? These are just a few of the question discussed by around 30 international researchers and industry practitioners at a workshop on market design held by ZEW in Mannheim on 28 and 29 May 2018. The event also marked the launch of the Leibniz project “Market Design for the Public Sector” conducted by the WZB Berlin Social Science Center and ZEW.

In his role as chair of the German Monopolies Commission, Professor Achim Wambach, president of the Centre for European Economic Research (ZEW), has spoken out against the fixed book pricing under German law which requires publishers to set a fixed retail price for the books they sell. According to Professor Wambach, this constitutes a serious market intervention that is preventing fair competition.

Does the tax and transfer system cause greater social inequality? The German tax and transfer system is continually criticised for being too complex and not transparent enough. In fact, the combination of social security contributions, income tax and transfer payments such as housing and child benefit can even mean that, for some people, an increase in income does not lead to more money in their pocket. This is particularly the case for the marginal burden, which represents the proportion of each extra euro earned that has to be handed back to the government. ZEW family economist Holger Stichnoth is critical of these disincentives in the German tax and transfer system.

The Centre for European Economic Research (ZEW) will host a workshop on the Economics of Immigration in Mannheim on 25 and 26 October 2018. The event aims to bring together international scholars from the field of the economics of migration in order to present and discuss recent empirical, theoretical and policy-oriented research looking at the impact of immigration on host countries. We encourage contributions from all areas of economics. Interested researchers are invited to submit full papers or preliminary versions no later than 13 July 2018 via immigration2018@zew.de.

Sebastian Blesse, researcher in the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), Mannheim, received this year's prize for research on federalism and regional studies (Preis für Föderalismus- und Regionalforschung). Along with his co-author Felix Rösel from the Dresden office of the ifo Institute, Sebastian Blesse was awarded the prize for their research paper entitled “Was bringen kommunale Gebietsformen?” (“What Are the Benefits of Municipal Territorial Reforms?”) published in the journal “Perspektiven der Wirtschaftspolitik” at the end of 2017.

Vítezslav (Vita) Titl was a visiting researcher in ZEW’s Research Department “Corporate Taxation and Public Finance” from 4 to 8 June 2018. He is a doctoral researcher at the University of Leuven and the Free University of Brussels, Belgium. His research interests focus on political and education economics. He particularly concentrates on political connections and their impact on public procurement markets and more generally on public good provision. During his stay in Mannheim, Vítezslav Titl talked about political connections and competition on public procurement markets in a ZEW Research Seminar on 8 June 2018.

Following their meeting at Schloss Meseberg in Brandenburg, the “Meseberg Declaration” signed off by German Chancellor Angela Merkel and French President Emmanuel Macron concretises the current proposals for a reform of the Eurozone. Professor Friedrich Heinemann, head of the Research Department "Corporate Taxation and Public Finance" at the Centre for European Economic Research (ZEW), offers his view on the matter.

Financial market experts remain overall rather cautious in their prognoses regarding the medium-term use of cryptocurrencies such as Bitcoin in everyday monetary transactions in Germany. According to the experts, we are more likely to see cryptocurrencies used as a method of payment for digital products in the medium term than for the purchase of everyday physical goods. In addition, the majority of the experts agree that financial innovations such as crypto assets/coins/tokens should be regulated according to pre-existing legislation. This is the result of this month’s special question in the June 2018 ZEW Financial Market Survey conducted by the Centre for European Economic Research (ZEW) in Mannheim.

Just under five per cent of firms in the German business economy are already using artificial intelligence (AI) technologies in 2018. This share is more than twice as high as it was in 2017. A further two per cent of companies are planning to introduce such technologies in the near future. Despite the fact that user rates have been low, it is likely that the development of AI applications will pick up pace considerably in the future. While 16 per cent of firms have identified AI technologies as a matter of key importance, 31 per cent expect to have AI solutions implemented by 2028.

The ZEW Indicator of Economic Sentiment for Germany recorded a decrease of 7.9 points in June 2018 and now stands at minus 16.1 points. This is the lowest reading since September 2012 and well below the long-term average of 23.3 points. The assessment of the current economic situation in Germany decreased by 6.8 points, leaving the corresponding indicator at 80.6 points.

According to the most recent survey for June (16/05/2018–01/06/2018), the economic outlook for China dropped slightly by 1.6 points to a new value of minus 2.9 points. This represents the fourth consecutive decrease in the CEP Indicator, which is currently well below the long-term average of 4.8 points. The CEP Indicator reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months.

After kicking off the year 2018 in an extremely positive mood, companies in the German information economy have found that the economic situation has since cooled somewhat. However, most firms remain optimistic over the future economic development of the sector. This assessment is based on the latest reading from the ZEW Economic Sentiment Indicator for the Information Economy, which reached a level of 65.1 points in the first quarter of 2018. In the previous quarter, the indicator was at a level of 70.5 points. The ZEW Economic Sentiment Indicator is the result of a survey among companies in the German information economy, conducted by the Centre for European Economic Research (ZEW), Mannheim, in April 2018.

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This issue contains the M&A Report focusing on “Number of Mergers and Acquisitions Involving German Firms Continues to Fall”.

Nicole Gürtzgen; André Nolte; Laura Pohlan; Gerard J. van den Berg
Do Digital Information Technologies Help Unemployed Job Seekers Find a Job? Evidence from the Broadband Internet Expansion in Germany

Laura Pohlan
Unemployment and Social Exclusion

Sarra Ben Yahmed; Pamela Bombarda
Gender, Informal Employment and Trade Liberalization in Mexico

Eckhard Janeba
Öffentliche Finanzen: Kontrolle und Einhaltung der Schuldenbremse als Herausforderung (Public Finance: The Challenge of Monitoring and Complying with the Debt Brake)

Wolfgang Polt, Jürgen Streicher, Peter Biegelbauer, David Binder, Bernhard Dachs, Michael Dinges, Klaus Friesenbichler, Silvia Hafellner, Florian Holzinger, Werner Hölzl, Jürgen Janger, Andrea Kasztler, Agnes Kügler, Karl-Heinz Leitner, Enikö Linshalm, Harald Oberhofer, Michael Ploder, Christian Rammer, Sybille Reidl, Andreas Reinstaller, Wolfram Rhomberg, Petra Schaper-Rinkel, Franz Sinabell and Gerhard Schwarz
Österreichischer Forschungs- und Technologiebericht 2018 (Austrian Research and Technology Report 2018)
 

Ex-Post Evaluation of Benefits and Costs of Environmental Regulation

Fiscal and Individual Returns to Education

Local Markets for Flexibility: Power Consumers Offering System Services in Electricity Distribution Grids

Motives to Publish: Patterns, Strategies, and Motives for Scientific Publishing by Firms

The Cultural and Creative Economy of Baden-Württemberg

Location of the event: ZEW, Mannheim

Speaker: Prof. Daniel S. Hamermesh (University of Texas at Austin)
Location of the event: ZEW, Mannheim

Speaker: Dr. Ingo E. Isphording (Institute of Labor Economics (IZA))
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Postdoctoral Researcher (100%) for the Research Department “Corporate Taxation and Public Finance“

Picture Credits: news article of 28 June 2018: JLL and ZEW, news article of 27 June 2018: @iStock/MarcBruxelle, news article of 15 June 2018: ZBW, press release of 14 June 2018: iStock.com/metamorworks, press release of 12 June 2018: iStock.com/muratsenel
 
All further pictures: ©ZEW