Newsletter April 2021

The COVID-19 pandemic is still massively affecting our everyday life one year on. The public debate focuses on topics such as triage, the prioritisation of vaccination groups and possible privileges for vaccinated people. Professor Alena Buyx, Chair of the German Ethics Council, and ZEW President Professor Achim Wambach discussed the importance of ethical guidance in these challenging times as part of the lecture series “First-Hand Information on Economic Policy” on Wednesday, 14 April 2021. The event was held online and was supported by the ZEW Sponsors’ Association for Science and Practice.

The German Federal Ministry for Economic Affairs and Energy congratulates the school team of the Albertus-Magnus-Gymnasium Stuttgart and ZEW Mannheim for winning second place in the YES! school competition 2020. The team, supervised by Professor Nicolas Fugger and Tobias Riehm from ZEW’s Research Department “Market Design”, convinced the jury with their idea “Kitafix – Matching daycare places and children more effectively through an innovative ranking system”. Over the course of the competition, the school students developed an innovative approach to finding a more effective way of allocating childcare places.

The new state government has been elected and is now preparing to take office. The structural change in the economy, which has picked up considerable pace as a result of the pandemic, will pose a major challenge for policymakers. Dealing with these challenges will determine whether Germany will be able to ensure prosperity in times of change.

In April 2011, the flagship report of the German Advisory Council on Global Change (WBGU) was published. The report was hailed at the time as an important impetus for a transformation towards a sustainable world. A recent study by ZEW Mannheim together with the German Agency for the Applied Energy Transition (dena) and researchers from Heidelberg University shows which of the demanded measures have been implemented and how the report is to be assessed in retrospect.

German consumers are more strongly affected by rising markups in trade, real estate and housing, healthcare and social services, and other services than the economy as a whole. And this trend is steadily increasing. In particular, households with low incomes, such as retired households, are negatively affected by such markups, according to a study by ZEW Mannheim commissioned by the Federal Ministry of Justice and Consumer Protection. Reasons for this include the increasing market power of companies and corporate concentration.

Around 420,000 German households over the age of 65 worry about their income, even though they have no outstanding debt on their homes. In contrast to other retirement planning schemes, the market for reverse mortgages is not well developed. According to ZEW researchers, the reasons for this lie with both consumers and providers. As their study suggests, the market potential of reverse mortgages could grow significantly in the future.

The Federal Constitutional Court has cleared the way for the EU’s 750 billion euro recovery fund in Germany. The actual constitutional suit has, however, not yet been decided. Professor Friedrich Heinemann, research department head and public finance expert at ZEW Mannheim, comments on this matter.

In the April 2021 survey (6–14 April 2021), the CEP indicator climbed 3.5 points to a new value of 46.3 points. The CEP indicator, based on the China Economic Panel (CEP) and conducted by ZEW Mannheim in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

Individuals who have experienced severe financial losses due to the coronavirus pandemic are significantly less willing to take risks. This particularly appears to be the case for households with a low income. On the contrary, other personality traits, such as patience and locus of control, remain unchanged following financial losses. These are the findings of a recent study by RWI – Leibniz Institute for Economic Research and ZEW Mannheim.

The ZEW Indicator of Economic Sentiment for Germany decreased in the current April 2021 survey, falling 5.9 points to a new reading of 70.7 points. This is the first time that the indicator has experienced a drop since November 2020. Expectations are still at a very high level.
The assessment of the economic situation in Germany improved by 12.2 points compared to the previous month. The corresponding indicator currently stands at minus 48.8 points, reaching roughly the same level as in March 2020.

The fact that the government bond markets within the eurozone have remained stable throughout the coronavirus pandemic is especially owed to the ECB and its PEPP securities purchase programme. By contrast, the EU coronavirus financial aid packages have not made any measurable contribution to narrowing interest rate differentials. This is confirmed by a study conducted by ZEW Mannheim with the support of the Brigitte Strube Stiftung.

OECD countries react differently to changes in the business cycle regarding their expenditure on research and development (R&D). Countries tend to noticeably increase their budgets for R&D when there is an economic upturn, while public R&D spending remains almost constant on average across all countries when there is a downturn in economic growth.

It is crucial for buyers in public procurement in Germany and Finland to avoid allocating public contracts to bidders with a bad reputation. However, the possibility of being able to avoid such bidders is limited in practice. According to a current ‘EconPol’ study in cooperation with ZEW Mannheim, public buyers either shun procurements which exceed expected costs or they reject these if they do not meet quality expectations.

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

Olivier Bos, Francisco Gomez-Martin, Sander Onderstal, and Tom Truyts
Signalling in Auctions: Experimental Evidence

Christian Rammer, Dirk Czarnitzki, and Gastón P. Fernández
Artificial Intelligence and Industrial Innovation: Evidence From Firm-Level Data

Hanna Hottenrott and Cornelia Lawson
What’s Behind Multiple Institutional Affiliations in Academia?

Janne Tukiainen, Sebastian Blesse, Albrecht Bohne, Leonardo Maria Giuffrida, Jan Jääskeläinen, Ari Luukinen, and Antti Sieppi
What Are the Priorities of Bureaucrats? Evidence From Conjoint Experiments With Procurement Officials

Zareh Asatryan, Thushyanthan Baskaran, Carlo Moana Birkholz, and Patrick Hufschmidt
Regional Redistribution of Mineral Resource Wealth in Africa

Zareh Asatryan, Thushyanthan Baskaran, Carlo Moana Birkholz, and David Gomtsyan
Favoritism and Firms: Micro Evidence and Macro Implications

Zareh Asatryan, Thushyanthan Baskaran, Patrick Hufschmidt, and Alexander Stöcker
Regional Favoritism and Human Capital Accumulation in Africa

Manuel Frondel, Daniel Osberghaus, and Stephan Sommer
Corona and the Stability of Personal Traits and Preferences: Evidence From Germany

Philipp Böing and Yihan Wang
Decoding China’s COVID-19 ‘Virus Exceptionalism’: Community-based Digital Contact Tracing in Wuhan

Florence Blandinières, Bastian Krieger, and Maikel Pellens
Cluster Support Activities in the German Biotechnology Sector

Reiner Manstetten, Andreas Kuhlmann, Malte Faber, and Marc Frick
Grundlagen sozial-ökologischer Transformationen: Gesellschaftsvertrag, Global Governance und die Bedeutung der Zeit (Foundations of Socio-Ecological Transformations: Social Contract, Global Governance and the Meaning of Time)

Verena Dutt, Leonie Fischer, Friedrich Heinemann, Margit Kraus, and Fynn Minkus
Länderindex Familienunternehmen (Country Index for Family Enterprises)

Dynamic Text Data Based Output Indicators as Base of a New Innovation Metric

Innovation Survey 2021 for Berlin

Innovation Survey 2021 for Brandenburg

Regional Economic Disparities in the Aftermath of the COVID-19 Outbreak: the Role of Digitalization and Working-from-Home

Swiss Report on Research and Innovation 2022: Comparing Switzerland with Selected Regions in Europe

In order to support the nationwide containment measures against the coronavirus, ZEW is examining to what extent the events listed here can take place virtually. Individual dates may be postponed. The current status of the events can be found in the ZEW Events Calendar. If you have any questions, please don’t hesitate to contact our event team at event@zew.de.

Speaker: Wouter Botzen (VU Amsterdam, the Netherlands)
Location of the event: Online

Speaker: Arthur van Benthem (The Wharton School, The University of Pennsylvania, Philadelphia, USA)
Location of the event: Online

Speakers: Margit Schratzenstaller (Austrian Institute of Economic Research, Vienna) and Andreas Schwarz (European Commission – DG Budget, Brussels)
Location of the event: Online

Speaker: Lisa Kahn (University of Rochester, USA)
Location of the event: Online

Speakers: Oriana Bandiera (London School of Economics and Political Science, UK) and Dmitry Taubinsky (University of California, Berkeley, USA)
Location of the event: Online

Speaker: Marit Hinnosaar (University of Nottingham, United Kingdom)
Location of the event: Online

Speaker: Ginger Zhe Jin (University of Maryland, USA)
Location of the event: Online

Location of the event: Online

Speaker: Lucas Davis (University of California, Berkeley, USA)
Location of the event: Online

Speaker: Nima Haghpanah (The Pennsylvania State University, University Park, USA)
Location of the event: Online

Speakers: Christiane Baumeister (University of Notre Dame, USA), Kenneth Gillingham (Yale University, USA), Ashley Langer (University of Arizona, USA), and Erik T. Verhoef (VU Amsterdam, the Netherlands)
Location of the event: Online

Speaker: Heski Bar-Isaac (University of Toronto, Canada)
Location of the event: Online

Speaker: Yeon-Koo Che (Columbia University, New York, USA)
Location of the event: Online

Speaker: Song Lin (The Hong Kong University of Science and Technology, China)
Location of the event: Online

Speaker: Johannes Johnen (Université catholique de Louvain, Ottignies-Louvain-la-Neuve, Belgium)
Location of the event: Online

Speaker: Matthew O. Jackson (Stanford University, USA)
Location of the event: Online

Speakers: Hanna Halaburda (Leonard N. Stern School of Business, New York University, USA) and Zsolt Katona (University of California, Berkeley, USA)
Location of the event: Online

Speaker: Arne Wittig (Former General Counsel of Thyssenkrupp and Deutsche Bank)
Location of the event: Online

Picture Credits: press release of 26.04.2021: iStock.com/Sergei Gnatiuk, press release of 26.04.2021: iStock.com/Bestgreenscreen, press release of 21.04.2021: Anna Logue Fotografie, press release of 16.04.2021: iStock.com/Gajus, news article of 15.04.2021: YES!-Young Economic Summit, news article of 15.04.2021: Anna Logue Fotografie/ZEW, press release of 08.04.2021: iStock.com/instamatics, news article of 07.04.2021: iStock.com/leolintang, press release of 06.04.2021: iStock.com/ipopba, press release of 31.03.2021: iStock.com/ronstik
All further pictures: ©ZEW