Newsletter January 2017

The key industries in Germany are planning to increase their investment in innovation in 2017 even more than in 2015. This is the case for the chemical and pharmaceutical industry, the mechanical engineering sector, the electrical industry and the automotive industry, as well as the IT and telecommunications sector.

In January 2017, Achim Wambach, President of the Centre for European Economic Research (ZEW), took over as chair of the Verein für Socialpolitik (German Economic Association, VfS). Over the course of the next two years, Wambach will serve as chairman of the association, which represents around 4,000 economists from German-speaking countries. The VfS is one of the largest economic associations in Europe, with members from all over the world; most of them, however, are from Germany, Austria or Switzerland.

ZEW’s attendance at the Annual Meeting of the Allied Social Science Associations (ASSA) proved a success. The world's most important conference in economics offered everything a top class scientific event needs: high-level scientific exchanges, presentations on recent research findings, the opportunity to network with leading economic researchers and new impulses for future research projects. With no less than 11 contributions, the research institute was strongly represented at this year's annual meeting in Chicago – a testament to ZEW's top-level scientific work.

As part of its green energy revolution, Germany is planning a mammoth project: Südlink, an 800-kilometre-long power transmission corridor connecting the wind-rich North with consumers in the South. But while everyone wants electricity, no one wants overhead power lines in their backyard. ZEW economist Vitali Gretschko explains how to build the north–south corridor using Market Design methods, without spending billions of euros for underground power lines.

Former ZEW President Professor Wolfgang Franz concluded the 25th anniversary ceremony of the Mannheim Centre for European Economic Research (ZEW) with a closing speech. Therein he recalled important moments in ZEW's history and forged a connection between these moments and the current and future challenges the institute will have to overcome.

The ZEW image film, which was first shown at the anniversary ceremony (in German)

The Centre for European Economic Research (ZEW) holds its fifteenth Conference on the Economics of Information and Communication Technologies (ICT) in Mannheim on 23 and 24 June 2017. The objective of the conference is to discuss recent scientific contributions to the economics of information and communication technologies (ICT) and the economics of ICT industries. Theoretical, empirical, and policy-oriented contributions are welcome. Please submit papers as a PDF or MS Word file to ict-conference@zew.de no later than 1 March 2017.

The Centre for European Economic Research (ZEW) and the Mannheim Centre for Competition and Innovation (MaCCI) are pleased to announce the sixth Mannheim Energy Conference on 11 and 12 May 2017. 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 energy2017@zew.de no later than 5 February 2017.

Dr. Mario Liebensteiner was a visiting researcher at ZEW’s Research Group "Competition and Regulation" from 23 to 25 January 2017. He is a postdoc at the Institute for Quantitative Economics of the Vienna University of Economics and Business (WU) in Austria. His research interests are in the fields of regulatory economics, empirical industrial organisation, energy economics, and applied econometrics. During his stay, he – together with ZEW researchers – analysed the search behaviour of consumers using price comparison sites for electricity tariffs, as well as its impact on pricing and competition. Furthermore, he held a ZEW Research Seminar on the effects of the electricity retail liberalisation on residential consumer tariffs.

In the most recent January survey (conducted between 3 and 17 January 2017), business expectations for China have declined. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has dropped by 10.9 points compared to November 2016 to a current total of minus 5.9 points. This falls far below the current long-term average of 5.1 points. The assessment of the current economic situation is more positive: at 2.4 points, the corresponding indicator is currently 7.6 points higher compared to November 2016.

The British Prime Minister Theresa May has set the course for the Brexit negotiations and announced that the United Kingdom intends to leave the European single market. Furthermore, May has committed to renegotiate Britain's membership in the European customs union and to define own rules with respect to immigration policy. Professor Achim Wambach, President of the Centre for European Economic Research (ZEW), comments on Great Britain's Brexit strategy.

The ZEW Indicator of Economic Sentiment for Germany has increased slightly in January 2017. The index has improved by 2.8 points compared to December, now standing at 16.6 points. "The slight increase of the ZEW Indicator of Economic Sentiment is mainly due the improved economic situation across European countries. The fairly good preliminary figures recorded for the development of the German GDP last year, as well as for the industrial production of the eurozone in November 2016, came as a surprise to many. This improvement in expectations can thus also be seen as a leap of faith for 2017," comments ZEW President Professor Achim Wambach.

At the start of 2017 executives at German companies in China are looking to the future with renewed optimism. Forecasts for the Chinese economy over the next twelve months have continued to improve slightly. The expected economic growth rate has jumped by 0.5 up to 1.6 points, much higher than the previous average of -5.1 points from when the survey began in the third quarter of 2013. These are the findings of the current ZEW-PwC China Economic Barometer, a survey carried out by the Mannheim Centre for European Economic Research (ZEW) together with the accounting and consulting firm PricewaterhouseCoopers (PwC). 31 executives at German companies in China took part in the survey in December 2016.

In 2015, German businesses increased their investments in innovation far more than previously planned. They invested a total of 157.4 billion euros in innovation – more than ever before. Compared to the previous year (2014: 145.0 billion euros) expenditure on innovation has increased by 8.8 per cent. These are the main findings of a current survey carried out by the Centre for European Economic Research (ZEW) in Mannheim on the innovation behaviour of German businesses on behalf on the Federal Ministry of Education and Research (BMBF).

Since 1993 the survey has been carried out annually in collaboration with the infas Institute for Applied Social Sciences and the Fraunhofer Institute for Systems and Innovation Research (ISI).

Donald Trump's plans to reform the corporate tax system in the United States are less radical than previously expected. If the president-elect implements the tax reform plans he put forward during his 2016 presidential campaign, the effective tax burden for US businesses would merely fall to the average European level. This may not only prevent US businesses from engaging in aggressive tax evasion; Trump's tax reform might also have significant implications for global tax competition. These are the findings of a recent analysis by the Centre for European Economic Research (ZEW) in Mannheim.

In December 2015, the Federal Cartel Office prohibited the online booking portal Booking.com from imposing its best price clause. Against this background, researchers from the Mannheim Centre for European Economic Research (ZEW) in collaboration with external researchers have investigated the impact of best price clauses on the use of different sales channels and on pricing decisions of hotels. The study has shown that in many cases, hotels do not comply with agreed best price clauses. Instead, they set a lower price on their direct channel than on large online travel agents where they also offer rooms.

The study has also found evidence that this might be occurring more frequently since the prohibition of Booking.com’s best price clause came into effect. In addition, since the Federal Cartel Office prohibited Booking.com from using this clause, the researchers have observed an increase in hotel room offers via direct channels where prices tend to be lower. At the same time, there has been an increase in hotel room offers on Booking.com as well.

The outgoing year of 2016 has surpassed 2015 in terms of mega deals in mergers and acquisitions (M&As) worldwide. The ZEW-ZEPHYR M&A Volume-per-Deal Index has been climbing to ever greater heights, with the year 2016 surpassing the previous record high of 106 points in March 2016 a further four times and ultimately peaking at 113 points in October 2016 – by far the highest index value since records began. These are the findings of studies carried out by the Mannheim Centre for European Economic Research (ZEW) on the basis of the Zephyr database of Bureau van Dijk.

The US economic policy changes pursued by the Trump administration will have rather small effects on EU Member States with regard to economic growth, consumption and investment. This is the result of a survey conducted by the Centre for European Economic Research (ZEW) among around 200 financial market experts as part of the Financial Market Survey in December 2016. An exception forms the export economy, where a clear majority of 59 per cent of respondents expects to see negative effects.

The effects of the large influx of refugees arriving in Germany have been the focus of intense political and social debate. A joint study by the Mannheim Centre for European Economic Research (ZEW) and the University of Strathclyde has been investigating the short-term effects of this migration on unemployment, crimes rates and voting behaviour in Germany. The results of the study show that increased migration leads to higher unemployment rates among non-German workers in particular. Crime rates experienced only a negligible change.

A larger influx of refugees or the existence of an immigrant reception centre in a particular region does not on their own lead to greater electoral success for anti-migration parties, such as the AfD ("Alternative for Germany"), in comparison with other regions with no large influxes of migrants or reception centres.

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

Katharina Nicolay and Christoph Spengel
The European Commission's CC(C)TB Re-Launch

Michael Hellwig; Kai Hüschelrath
When Do Firms Leave Cartels? Determinants and the Impact on Cartel Survival

Albert Solé-Ollé; Elisabet Viladecans-Marsal
Housing Booms and Busts and Local Fiscal Policy

Christoph Breunig; Michael Kummer; Jörg Ohnemus; Steffen Viete
IT Outsourcing and Firm Productivity: Eliminating Bias from Selective Missingness in the Dependent Variable

Martin Kesternich; Daniel Römer; Florens Flues
The Power of Active Choice: Field Experimental Evidence on Repeated Contribution Decisions to a Carbon Offsetting Program

Miguel Angel Tovar Reaños; Katrin Sommerfeld
Fuel for Inequality: Distributional Effects of Environmental Reforms on Private Transport

Andreas Löschel; Benjamin Johannes Lutz; Shunsuke Managi
The Impacts of the EU ETS on Efficiency – An Empirical Analyses for German Manufacturing Firms

Martin Biewen; Martin Ungerer; Max Löffler
Trends in the German Income Distribution: 2005/06 to 2010/11

Kathrine von Graevenitz
The Amenity Cost of Road Noise

Gerard van den Berg, Michael Kolb, Martin Lange, and Friedhelm Pfeiffer
Integrating Refugees in the Rhine-Neckar Region: Initial Evidence from an Inclusive Soccer Project

Sabine Graumann, Irene Bertschek, Tobias Weber, Martin Ebert, Karola Ettner, Ansel Speich, Michael Weinzierl, Jörg Ohnemus, Thomas Niebel, Christian Rammer, Fabienne Rasel, and Patrick Schulte
Monitoring Report DIGITAL Economy 2016

Mathias Dolls and Richard Lewney
Feasibility and Added Value of a European Unemployment Benefit Scheme: Backward-Looking Analysis

Austrian Research and Technology Report 2017

Meta-Study on the Optimal Design for Government and Corporate Bond Auctions

Modelling and Evaluating the Socio-Economic Impacts of Research and Innovation with the Suite of Macro- and Regional-Economic Models

Preparing the CIS 2018

Rational Ignorance in the Digital Age – A Meta-Analysis

The Sectoral Impact of the Digitisation of the Economy

Location of the event: ZEW, Mannheim

Speaker: Dr. Toshiaka Yamanaka (University of Tokio)
Location of the event: ZEW, Mannheim

Speaker: Prof. Nicola Dimitri (University of Siena)
Location of the event: ZEW, Mannheim

Speaker: Frank Verboven (Katholieke Universiteit Leuven)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Jaka Cepec (University of Ljubljana)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: German Institute for Economic Research (DIW) and Humboldt University of Berlin

Speaker: Prof. Dr. Dr. h.c. mult. Hans-Werner Sinn
Location of the event: ZEW, Mannheim

Picture Credits: Press Release of 17 January 2017: ©iStock.com/George Clerk, 11.01.2017: ©iStock.com/peepo, 02 January 2017: ©iStock.com/400tmax, 28 December 2016: ©iStock.com/saquizeta, 20 December 2016: ©iStock.com/olya_steckel, 19 December 2016: ©iStock.com/csakisti.
 
All further pictures: ©ZEW