Newsletter November 2019

Strengthening the exchange of knowledge and technology between universities, public research institutes, and firms is a key policy priority in Germany. At the same time, indicators on the extent and content of transfer processes between the two sectors are largely missing. How to proceed on this challenge was at the centre of a conference that took place in Berlin on 11 October 2019. Jointly organised by ZEW Mannheim and Stifterverband and supported by the Federal Ministry of Education and Research, the event provided an opportunity for intensive exchange to its more than 130 participants.

High-ranking representatives of companies, associations, research institutions, and from the world of politics delved into the details of technology and knowledge transfer.

Is working worth it for those relying on long-term unemployment benefits? How can we financially prepare for the future despite low interest rates? Can we reliably spot fake news as such? How can we make daycare allocations more efficient? What role does the labour market play in integrating refugees? Good answers to these questions simply aren’t had without input from the younger generation, which is exactly what the YES! – Young Economic Summit is for.

It was one of the longest booms in post-war history. Since 2009, Germany’s gross domestic product (GDP) has grown year after year. Per capita GDP today is 33 per cent higher than it was ten years ago. But now growth has stalled. Following a 0.1 per cent quarter-on-quarter decline in GDP in the second quarter, GDP is expected to shrink again in the third quarter. The German Federal Statistical Office, which publishes its quarterly figures on 14 November, may declare a “technical recession” – a decline in GDP over two consecutive quarters. Should the government take steps to stimulate the economy?

In the first semester of 2020, ZEW Mannheim once again offers a wide range of advanced training courses on economic topics, scientific methods and soft skills. In addition to our expert seminars, which are open to the general public, ZEW’s advanced training team has also developed qualification courses specifically tailored to the particular needs of organisations, such as seminars, workshops, training programmes, coachings as well as long-term, international qualification courses.

On 7 November 2019, ZEW Mannheim welcomed 25 apprentices undertaking vocational training in the field of commerce at Berufsbildungszentrum Mannheim (BZE). During their visit, the group found out about the day-to-day business in an economic research institute, how ZEW differs from a university-based economics department, and which specific research questions are tackled by the ZEW team.

ZEW Mannheim is pleased to announce the international conference on The German Labor Market in a Globalized World from 23 to 24 March 2020. The event is sponsored by the DFG Priority Programme 1764 and Research Data Centre (FDZ) of the Federal Employment Agency (BA) at the Institute for Employment Research (IAB). The conference focuses on technology, trade and demographic changes and the ways they interact with employment, wages and participation in the labour market, with a particular emphasis on the role of institutions. Researchers are invited to submit empirical and theoretical contributions on this topic from all areas of economics and sociology with a focus on labour, education, health, or human resource management. Please submit a full paper, or a preliminary version, in PDF format, including up to four JEL Codes to Angelika Ganserer via dfg1764@ zew. de no later than 20 December 2019.
 

ZEW Mannheim is pleased to announce the fourth workshop on environmental economics analyses using official firm data for Germany (AFiD), which will take place in Mannheim on 26 and 27 March 2020. Please note that the workshop will be held in German. The primary focus of the event is the presentation and discussion of new research findings from analyses in the field of environmental economics using official firm data for Germany (AFiD) from the research data centres of the statistical offices of the Länder. In addition, the event shall facilitate the exchange of information between data users and data providers. Researchers are invited to submit an abstract of 600 to 1,000 words (including bibliography) to afid@ zew. de no later than 15 January 2020.

Loren Brandt, PhD, was a visiting researcher in ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” from 4 to 8 November 2019. He is a professor at the University of Toronto, Canada. His research interests include economic development, economic history and the Chinese economy. During his stay, Loren Brandt worked with ZEW researchers Dr. Philipp Böing and Professor Bettina Peters on a joint project to identify the impact of research and development (R&D) and patents on productivity and markups in the Chinese economy.

Serena Trucchi, PhD, was a visiting researcher in ZEW’s Research Department “International Finance and Financial Management” from 23 September to 31 October 2019. She is an assistant professor at the Ca’ Foscari University of Venice, Italy. Her research interests include household consumption and saving, labour supply, ageing, financial literacy and applied microeconomics. During her stay, Serena Trucchi worked on a project aimed to investigate whether the response of consumption to income risk has an intergenerational component, namely whether income uncertainty of young generations affects consumption of their parents. To this purpose, the analysis exploits a cross-country European longitudinal dataset collecting information about parents and offspring. Results show a significant impact of offspring’s income uncertainty on parental consumption, showing a heterogenous effect across European countries.

Vote buying your way to a majority: interest groups increase their donation activity to members of the US House of Representatives in order to push through contested bills with a narrow majority. Members who are known to be indifferent or undecided are most likely to be targeted by interest groups. During election years, campaign finance donations from interest groups increase around voting dates of contested bills. These are the results of a study conducted by ZEW Mannheim together with the University of Basel, the University of St. Gallen, and the Free University of Bozen-Bolzano.

Senior managers’ personal histories play a key role in the European Investment Bank (EIB) lending process, with loans for financing large infrastructure projects being more likely to flow into a region where one or more members of the EIB’s Board of Directors come from, while regions not represented on the Board are less likely to receive loans. This is the result of a recent study by ZEW Mannheim, which has evaluated all EIB loans since its foundation in 1958, comparing them with the respective careers of its Board members.

On their product websites, German automobile manufacturers advertise their executive class vehicles primarily using arguments that appeal to their customers’ emotions rather than focusing on sustainability and environmental aspects. The German producers Audi, BMW, Mercedes and Porsche mainly use terms relating to the driving experience on the product websites for their top-class models – unlike the US electric car pioneer Tesla, which primarily concentrates on issues such as safety and autonomous driving in its external communication. This is the result of a recent analysis conducted by ZEW Mannheim.

In the most recent survey for November (5–13 November 2019), economic sentiment for the Chinese economy has increased slightly by 1.9 points. The CEP (China Economic Panel) Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently at minus 3.9 points (October 2019: minus 5.8 points). The point forecasts for real gross domestic product (GDP) growth were slightly lowered, however. Growth over the course of the current year is now expected to be 6.1 per cent (previous month: 6.2 per cent).

The forecast for 2020 was lowered more strongly, from 6.0 per cent in the previous month to a current estimate of 5.8 per cent.

The Federal Statistical Office has released its initial calculation for growth in German gross domestic product (GDP) in the third quarter. Compared to the previous quarter, price-adjusted GDP in Germany has grown by 0.1 per cent. The risk of recession has thus been averted for the time being. After GDP had dropped by 0.1 per cent in the previous quarter, a continuation of the negative growth rate in the third quarter would have fit the technical definition of recession. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on the Federal Statistical Office’s calculation.

The economic figures for the cultural and creative industries in Germany developed largely positively in 2018. After experiencing a repeated increase, turnover, employment and gross value added all reached new record levels. Taking both self-employed workers and employees liable to social security contributions into account, overall employment in the German cultural and creative industries rose to a total of 1,195,035 individuals in 2018. Gross value added in the same year reached an estimated 100.5 billion euros. These are some of the findings of the 2019 Monitoring Report on the state of cultural and creative industries in Germany compiled on an annual basis by ZEW Mannheim and Fraunhofer ISI on behalf of the Federal Ministry for Economic Affairs and Energy.

The ZEW Indicator of Economic Sentiment for Germany has increased substantially in November 2019. Currently standing at minus 2.1 points, the indicator climbed 20.7 points compared to the previous month. For the current survey, the assessment of the economic situation in Germany has again improved slightly by 0.6 points, with the corresponding indicator increasing to a current reading of minus 24.7 points.

Decades after the German reunification, the social and economic consequences of surveillance by unofficial employees of the Ministry for State Security (Stasi) in the former GDR are still visible. Citizens who lived in counties of the GDR in the year before the fall of the Berlin Wall where the proportion of Stasi employees in relation to the population was quite high are in a worse economic situation today than citizens whose environment was less heavily spied on. The reason for this is a general loss of trust in state institutions and the citizen’s personal social environment, as a study by ZEW Mannheim shows.

In Germany, the buildings sector ranks high in terms of its amount of both final energy consumption and greenhouse gas emissions. Putting a price on CO₂ emissions is the most effective tool when it comes to curbing the sector’s high amount of harmful emissions. In turn, subsidies and regulatory requirements could largely be done without. The Climate Action Plan recently proposed by the federal government exacerbates social inequality via its redistribution effect. To counteract this, a per capita relief for taxes or social welfare contributions could be introduced to benefit especially low-income households.

These are the findings put forward by researchers at ZEW Mannheim and the Leibniz Institute of Ecological Urban and Regional Development (IÖR) in Dresden in their latest policy brief on the federal government’s climate package.

In an official letter to the United Nations, the US government has rescinded its part in the Paris climate agreement. Professor Martin Kesternich, deputy head of the ZEW Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim and professor of economics with a special focus on environmental and resource economics at the University of Kassel, comments on this matter.

The lengthy process of Britain’s withdrawal from the European Union continues to create great uncertainty about the future of trade relations between the UK and the EU. This also has a significant effect on mergers and acquisitions (M&As) between British and German companies. Through August of this year, only 46 transactions took place. While the total number of transactions with UK companies remained stable at around 95 both in 2016 – the year of the Brexit vote – and in 2017, only 76 transactions were registered in 2018. These are the results of calculations made by ZEW Mannheim on the basis of the Zephyr database of Bureau van Dijk.

The US Federal Reserve continued the series of interest rate cuts it started in July 2019 and lowered its base rates for the third time in a row by 0.25 percentage points to a current range between 1.50 and 1.75 per cent. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

The German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates has published its forecasts for federal, state and municipal tax revenues in Germany. Despite the economic slowdown, the working party expects tax revenues to continue to rise significantly in the coming years, from 796.4 billion euros in 2019 to 935 billion euros in 2024. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

Billions of euros in tax benefits have been found to be ineffective and could well be discontinued. This is the conclusion of a study by the FiFo Institute for Public Economics at the University of Cologne, ZEW Mannheim, the ifo Institute and the Fraunhofer Institute for Applied Information Technology (FIT). The four research institutes evaluated a total of 33 state tax benefits amounting to roughly 7.4 billion euros on behalf of the Federal Ministry of Finance.

The number of mergers and acquisitions (M&A) involving German firms has fallen sharply since the beginning of 2019. The indicator’s performance proved particularly weak in April and May 2019. In April, the ZEW-ZEPHYR M&A Index dropped to 58 points, its lowest level ever. In May, it climbed only two points to 60, the German M&A market’s second-poorest showing.

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

Ulrich Matter, Paolo Roberti and Michaela Slotwinski
Vote Buying in the US Congress

Alexandra Avdeenko, Albrecht Bohne and Markus Frölich
Linking Savings Behavior, Confidence and Individual Feedback: A Field Experiment in Ethiopia

Daniel Klein, Christopher Ludwig and Christoph Spengel
Ring-Fencing Digital Corporations: Investors Reaction to the European Commission’s Digital Tax Proposals

Andreas Lichter, Max Löffler, and Sebastian Siegloch
The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany

Boris Ivanov, Friedhelm Pfeiffer, and Laura Pohlan
Do Job Creation Schemes Improve the Social Integration and Well-Being of the Long-Term Unemployed?

Michael Hellwig and Falk Hendrik Laser
Bank Mergers in the Financial Crisis – A Competition Policy Perspective

Zareh Asatryan and Annika Havlik
The Political Economy of Multilateral Lending to European Regions

This issue contains a focus on Europe with the following articles:

Martin Achtnicht, Robert Germeshausen, and Kathrine von Graevenitz
Wärmewende im Gebäudesektor: Lasst den CO₂-Preis wirken (Heat Transition in the Buildings Sector: Let the CO₂ Price Take Effect)

Matthias Hunold, Reinhold Kesler, and Ulrich Laitenberger
Mehr Transparenz bei Suchergebnissen auf Onlineplattformen nützt den Verbrauchern (Greater Transparency in Search Results on Online Platforms Benefits Consumers)

Jens-Uwe Franck and Dimitrios Linardatos
Schutz der Robo Advisor vor Marktbarrieren: Zugriffsrechte auf Banken-Schnittstellen? (Protection of the Robo Advisors Against Market Barriers: Access Rights to Bank Interfaces?)

Evaluation of the KfW Programme “ERP Digitalisation and Innovation Loan”

Speaker: Christian Peukert (Universidade Católica Portuguesa, Lisbon, Portugal, and ETH Zurich, Switzerland)
Location of the event: ZEW, Mannheim

Speaker: Andrea Weber (Central European University, Budapest, Hungary)
Location of the event: ZEW, Mannheim

Speaker: Juan-José Ganuza (Pompeu Fabra University and Barcelona Graduate School of Economics, Spain)
Location of the event: ZEW, Mannheim

Speaker: Stefan Wilbert (Stadtwerke Köln GmbH)
Location of the event: University of Mannheim

Speakers: Nikolas Wölfing (Mannheim Institute for Sustainable Energy Studies (MISES) and University of Mannheim) and Robert Germeshausen (ZEW)
Location of the event: ZEW, Mannheim

Speaker: Monika Queisser (Organisation for Economic Co-operation and Development (OECD), France)
Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Dr. h.c. Christoph M. Schmidt (Chairman of the German Council of Economic Experts)
Location of the event: ZEW, Mannheim

Speaker: Peter Altmaier (Federal Minister for Economic Affairs and Energy)
Location of the event: ZEW, Mannheim

Picture Credits: press release from 28.11.2019: iStock.com/carterdayne, press release from 27.11.2019: iStock.com/chris-mueller, press release from 20.11.2019: PantherMedia/zhuzhu, news article from 15.11.2019: YES! – Young Economic Summit, press release from 14.11.2019: Anna Logue Fotografie / ZEW, news article from 13.11.2019: Anna Logue Fotografie / ZEW, news article from 13.11.2019: PantherMedia/pressmaster, press release from 13.11.2019: iStock.com/Vasyl Dolmatov, press release from 11.11.2019: iStock.com/kmn-network, press release from 08.11.2019: iStock.com/kodda, press releases from 30.10.2019: Anna Logue Fotografie / ZEW, press release from 30.10.2019: iStock.com/ansonsaw
 
All further pictures: © ZEW