Newsletter December 2018

Dear Readers,
an eventful year is coming to a close. With this e-mail, you are receiving the last issue of the ZEW Newsletter English edition in 2018. We would like to take this opportunity to thank your for your sustained interest in news from ZEW and hope that you will find interesting news in this last issue for 2018. We wish you and your loved ones a pleasant festive season and a prosperous, healthy 2019!
 
Best wishes,
the ZEW Newsletter editorial team

ZEW was happy to organise a Lunch Debate, entitled “Beyond Horizon 2020: Translating Public Research into Innovation“, at the Representation of the State of Baden-Württemberg in Brussels. With the ninth EU Framework Programme Horizon Europe currently being subject of extensive discussion at European level, the event was met with great interest due to its high topicality.
 
 

Many observers were surprised to see that the trade unions’ recent nominee for Germany’s Council of Economic Experts is an economist who has bemoaned the discipline’s ‘lack of self-reflection and methodological and theoretical diversity’. However one views the nomination, it would be too simplistic to see it either as a mere affront to the discipline or an indication of a need for diversification in the wake of the financial crisis.

ZEW will once again be attending the ASSA Annual Meeting held in the United States in 2019. The event, which this year will take place from 4 to 6 January in Atlanta, Georgia, is set to welcome over 13,000 participants, making it the most important conference in the world for economists. The conference is jointly organised by the American Economic Association (AEA) and the Allied Social Sciences Association (ASSA).

The 5G mobile network standard is expected to lay the basis for Germany’s digital economy. In November, the country’s Bundesnetzagentur (Federal Network Agency) approved the proposed rules for allocating 5G frequencies and set out the conditions for the frequency auction, which is scheduled for the spring of 2019. Professor Vitali Gretschko, an expert on market design, discusses the new rules.

To what extent do house prices depend on the prices of other properties? Why are there differences between the list price of a house and the transaction price? And how much power do project developers have in certain real estate markets? These were some of the questions discussed by international researchers of the Leibniz Network “Real Estate Markets and Capital Markets” (ReCapNet) on 8 and 9 November 2018 at the Centre for European Economic Research (ZEW) in Mannheim.

The German Real Estate Finance Index (DIFI) by ZEW and JLL decreased once again in the fourth quarter of 2018 to a current reading of minus 10.8 points, falling to the lowest level in almost two calendar years. The experts’ considerably more pessimistic assessment of the financing situation was largely driven by the weakening economy in Germany. The survey participants gave an equally negative assessment of the future development of retail property financing.

Christmas is just around the corner and the annual hunt for presents has begun. But what does economics say about the sense and nonsense of gift-giving? Should the tradition of gift-giving be abolished from a rational point of view – or is there a good justification for it? This was the subject of discussion of a Christmas lecture by ZEW President Professor Achim Wambach and Professor Axel Ockenfels, economist at the University of Cologne, at the Centre for European Economic Research (ZEW), Mannheim.

Electromobility, safety, autonomous driving and artificial intelligence (AI) – these are the major topics of the automotive industry according to Klaus Fröhlich, board member for development of the Bavarian automobile manufacturer BMW. With market conditions becoming ever more dynamic, it is difficult for a German carmaker to keep pace with China and the USA, let alone to define new standards. In his talk at the Centre for European Economic Research (ZEW), Mannheim, on 4 December 2018, Fröhlich presented his vision for the future of cars, the industry as a whole as well as his own company in the lecture series “First-Hand Information on Economic Policy”.

The Centre for European Economic Research (ZEW) is pleased to announce that the annual ZEW Public Finance Conference will take place in Mannheim on 2 and 3 May 2019. This year’s focus is on the political economy of European integration. Submissions relating to the focus of this year’s conference are particularly welcome, though we also encourage submissions from all other areas of public economics and political economy. Please submit your paper via the conference management website no later than 15 February 2019. The conference fee will be waived for presenters.

The Centre for European Economic Research (ZEW) and the Mannheim Centre for Competition and Innovation (MaCCI) are pleased to announce the eighth Mannheim Energy Conference on 6 and 7 May 2019. International scholars and practitioners in the field of energy economics are invited to discuss latest insights, new opportunities and future challenges. Advanced theoretical, empirical, and policy-oriented contributions are welcome. Interested researchers are invited to submit preferably an academic paper or an extended abstract (at least three pages), and interested professionals may submit a single-page abstract in PDF format to energy2018@zew.de no later than 11 February 2019.

The Centre for European Economic Research (ZEW) is pleased to announce the 2019 Competition and Innovation Summer School from 29 to 31 May 2019. This workshop, which takes place in Ulcinj in Montenegro, offers young researchers in the fields of innovation and competition economics the opportunity to discuss their dissertation projects with experienced and renowned scholars, as well as other PhD students and postdoctoral researchers in an inspiring environment. Applications from advanced PhD students and postdoc researchers are welcome. Please submit an extended abstract of your paper, a letter of reference from your PhD supervisor and your CV to registration@euro-ciss.eu. The deadline for submission is 28 February 2019.

The Sponsors’ Association for Science and Practice of the Centre for European Economic Research (ZEW), Mannheim, has granted two new science prizes. Dr. Dominik Rehse, senior researcher at ZEW, was awarded for the best scientific performance. The prize for the best economic policy advising project went to the ZEW researchers Professor Irene Bertschek, Dr. Jörg Ohnemus, Dr. Thomas Niebel and Dr. Christian Rammer. Both prizes are endowed with 5,000 euros each. The prizes were handed over by Claudia Diem, board member of BW-Bank and member of the ZEW Sponsors’ Association.

Heike Ehrhard successfully completed her dual bachelor’s degree programme in business information systems at the Baden-Wuerttemberg Cooperative State University Mannheim (DHBW) and at ZEW in autumn 2018. In October, she joined the ZEW General Services Department in the area of digitalisation as a staff member. ZEW congratulates Ms. Ehrhard on completing her dual studies and hopes to support further vocational training programmes in the future.

As expected, the US Federal Reserve announced its latest decision to raise the target range for the federal funds rate to 2.25–2.50 per cent. The move marked the fourth increase this year. Professor Friedrich Heinemann, head of the “Corporate Taxation and Public Finance” Research Department at the Mannheim Centre for European Economic Research (ZEW), offers his view.

While the US tax reform under President Donald Trump is intensifying global tax competition and many European countries are increasingly promoting investment in innovative business models, Germany is falling behind on the global stage due to its unchanged high effective tax burden. As a result, Germany has come in last in an international ranking comparing the tax attractiveness of countries for investments in digital business models. This is the key finding of the study “Digital Tax Index 2018: Locational Tax Attractiveness for Digital Business Models”, carried out by the Centre for European Economic Research (ZEW), Mannheim, together with the University of Mannheim and the auditing and consulting firm PricewaterhouseCoopers (PwC).

Expectations regarding the Chinese economy improved in the most recent survey for December (28/11/2018 –13/12/2018). With a current reading of minus 20.5 points, the CEP indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, remains, however, clearly in negative territory. Despite its most recent increase of 9.5 points compared to the previous month (November 2018: minus 30.0 points), the indicator continues to signal an economic downturn.

The indicator has thus remained well below the long-term average of 3.0 points, which has not been exceeded since March 2018.

The number of mergers and acquisitions (M&A) completed worldwide has continued to decline. This downward trend was only briefly interrupted in June 2018, which saw the number of global acquisitions rise to a moderate 660 transactions. The volume per deal, on the other hand, has remained stable. After a brief upturn, the twelve-month moving average has continued its downward trend and now stands at 112 points – its lowest level since February 2015. These are the findings of studies carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

At its meeting today, the Governing Council of the European Central Bank (ECB) officially announced the end of its asset purchase programme at the close of 2018. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), comments on the ECB’s decision.

The ZEW Indicator of Economic Sentiment for Germany recorded an increase of 6.6 points in December 2018 and now stands at minus 17.5 points. Despite this increase, the indicator is still clearly in negative territory and remains well below the long-term average of 22.5 points. The assessment of the current economic situation in Germany once again decreased considerably in December, with the corresponding indicator falling by 12.9 points to a level of 45.3 points.

At their most recent meeting, the European finance ministers have agreed on a reform proposal for the monetary union. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), comments on the reform deal.

In 2017, the information and communication technology (ICT) sector in Germany managed to increase its gross value added to 108 billion euros. This corresponds to a four per cent increase compared to the previous year. The number of employees subject to social insurance contributions and self-employed persons has risen to just under 1.2 million, meaning that a total of almost 250,000 new jobs have been created in the ICT sector since 2010 – an increase of 27 per cent. These and other findings can be found in the most recent DIGITAL Economy Monitoring Report, compiled by the Centre for European Economic Research (ZEW), Mannheim, in collaboration with Kantar TNS on behalf of the Federal Ministry for Economic Affairs and Energy.

Even after the US tax reform with its massive tax cuts, German municipalities with low trade taxes still offer more advantageous tax conditions than important US states such as California or New York. This is the key finding of a recent study carried out by the Centre for European Economic Research (ZEW) in Mannheim on behalf of the Bavarian Industry Association (vbw).

In 2017, the cultural and creative industries in Germany once again experienced a significant increase in the number of core employees, which rose to a total of 1.159 million. Gross value added also developed positively, reaching 102.4 billion euros last year. The cultural and creative industries were able to match the high levels achieved in the previous year with respect to both sales and the number of companies. These are some of the findings of the 2018 Monitoring Report on the state of cultural and creative industries in Germany compiled on an annual basis by the Centre for European Economic Research (ZEW), Mannheim, and Fraunhofer ISI on behalf of the Federal Ministry for Economic Affairs and Energy.

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Claire Gavard; Sebastian Voigt; Aurélien Genty
Using Emissions Trading Schemes to Reduce Heterogeneous Distortionary Taxes: the Case of Recycling Carbon Auction Revenues to Support Renewable Energy

Robert Germeshausen
Effects of Attribute-Based Regulation on Technology Adoption – The Case of Feed-In Tariffs for Solar Photovoltaic

Vitali Greschko; Helene Mass
Endogenous Worst-Case Beliefs in First-Price Auctions

Helene Mass
Strategies under Strategic Uncertainty

Vitali Gretschko; Achim Wambach
Contract Design with Limited Commitment

Maria Kyropoulou; Josué Ortega; Erel Segal-Halevi
Fair Cake-Cutting in Practices

Josué Ortega
Multi-Unit Assignment Under Dichotomous Preferences

Christoph Spengel, Frank Schmidt, Jost Henrich Heckemeyer, Katharina Nicolay, Alexandra Bartholmeß, Rainer Bräutigam, Julia Braun, Peter Buchmann, Theresa Bührle, Elisa Casi, Verena Dutt, Leonie Fischer, Christoph Harendt, Marcel Olbert, Olena Pfeiffer, Thomas Schwab, Daniela Steinbrenner, Kathrin Stutzenberger, Maximilian Todtenhaupt, Heiko Vay and Ann-Catherin Werner
Effective Tax Levels Using the Devereux/Griffith Methodology - Update 2017

Petrra Deger, Martin Lange, Friedhelm Pfeiffer, Katrin Sommerfeld and Corinna Uebel
Arbeitsmarktintegration von Geflüchteten – eine Herausforderung vor Ort (Integrating Refugees into the Labour Market – Local Challenges)

Friedrich Heinemann, Margit Kraus and Daniela Steinbrenner
Länderindex Familienunternehmen - Standortfaktoren in Emerging Markets (Country Index for Family Businesses – Location Factors in Emerging Markets)

Climate Protection Potential of Digital Transformation: Micro- and Macroeconomic Evidence on the Role of Demand Effects and Production Relocation

Evaluating Germany’s Climate Mitigation and Adaptation Practice

Incentives, Fairness and Compliance in International Environmental Agreements

Speaker: Prof. Joel Waldfogel (Carlson School of Management, USA, and ZEW)
Event location: ZEW, Mannheim

Speaker: Prof. Joel Waldfogel (Carlson School of Management, USA, and ZEW)
Location of the event: ZEW, Mannheim

Speaker: Paolo Brunori, PhD (University of Florence)
Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Ferdinand Kirchhof (Federal Constitutional Court)
Location of the event: ZEW, Mannheim

Speaker: Barbara Hey (ZEW)
Event location: ZEW, Mannheim

Picture Credits: news article of 20. December 2018: Eric Berghen, press release of 18. December 2018: iStock.com/Easyturn, press release of 29. November 2018: iStock.com/Jag_cz, press release of 29. November 2018: iStock.com/olya_steckel, press release of 28. November 2018: iStock.com/Vasyl Dolmatov
 
All further pictures: ©ZEW