Michael Berlemann
Michael Berlemann

Articles in Refereed Journals

Climate-Related Hazards and Internal


Empirical Evidence from Rural Vietnam


with Thi Xuyen Tran

Economics of Disasters and Climate Change (forthcoming)


In this paper we employ commune-level data from Vietnam to study whether three types of natural disasters have an impact on internal migration figures. Episodic droughts and flood events tend to cause emigration from the affected communes. While droughts primarily cause temporary migration, flood events tend to induce permanent moves out of the affected regions. Whenever drought or flood events are perceived to have become more severe over the last decade, we find systematically higher emigration from the affected communes. Typhoons remain without any significant effect in both the short- and the long-run.

Disposition Time and the Utilization of Prior Judicial Decisions

Evidence from a Civil Law Country


with Robin Christmann

International Review of Law & Economics (forthcoming)


Court delay frustrates economic behavior. This paper examines the nexus between the case disposition time and the availability of prior court decisions for the civil law. We model litigation as a rent-seeking game, and find that prior court decisions curb strategic behavior in similar cases. Thus, the excessive use of party resources in litigation, such as time, is reduced if prior decisions clarify the interpretation of the law. Using judge-level data, we provide empirical evidence on a potential role of such ‘precedents’ for case disposition time in a civil law country. Our results show that the availability of prior decisions contributes to a significant reduction in disposition time. Moreover, the reduction in the duration of trials becomes stronger when the stock of previous court decisions grows. We conclude that the utilization of prior judicial decisions plays a crucial role for the efficiency of justice also in civil law countries.

Dating the Start of the U.S. House Price Bubble
An Application of Statistical Process Control


with Julia Freese & Sven Knoth

Empirical Economics (forthcoming)


While most economists agree that the recent worldwide financial crises evolved as a consequence of a bursting bubble on the U.S. house market, the related literature yet failed to deliver a consensus on the question when exactly the bubble started developing. The estimates in the literature range in between 1997 and 2002, while applications of market-based-procedures deliver even later dates. In this paper we employ the methods of Statistical Process Control (SPC) to date the likely beginning of the bubble. The results support the view that the bubble on the U.S. house market already emerged as early as 1996/1997.

Determinants of In-Court-Settlements
Empirical Evidence from a German Trial Court


with Robin Christmann

Journal of Institutional Economics 15(1), 2019, 143-162.


Because verdicts are typically the more costly resolution of legal disputes, most governments are interested in high settlement rates. In this paper, we use a unique dataset of 860 case records from a German trial court to explore which institutional factors have a significant impact on the decision to settle in civil law litigation. We find that procedural aspects and individual characteristics of the involved judge have a significant impact on in-court settlement probability. We also find that judge-specific aspects such as the judge’s gender may have an impact on settlement probabilities in certain subfields of law. Based on our empirical results, we derive some conclusions for legal policies that aim at increasing settlement rates.

The Distance Bias in Natural Disaster Reporting


with Tobias Thomas
Applied Economics Letters 26(12), 2019, 1026-1032.


Whenever governments or international organizations provide aid in the aftermath of natural disasters, they typically justify this support by humanitarian motives. Previous empirical research found that media reports on natural disasters have a systematic impact on the amount of provided disaster aid. While this is unproblematic as long as media reports are unbiased and thus deliver an undistorted picture of the occurrence and severity of worldwide occurring disasters, systematic reporting biases would lead to distorted aid flows and perhaps other distortions like an insufficient perception of a region in international organizations. Based on data on three US news shows we show that disaster reporting is subject to a distance bias, e.g., the likelihood that a disaster is covered by the media depends on the distance between the country where the media are located and the country where the disasters occur. We also find evidence that besides the distance bias the state of economic development of a country and importance as export markets have a positive effect on the probability that US news shows are reporting on a natural disaster. As a result, international aid flows might be systematically biased and not distributed in line with the needs of the victims.


The Regional and Sectoral Importance of the German Mittelstand


with Vera Jahn & Robert Lehmann

CESifo Forum 20(2), 2019, 47-48.


In this paper we report results from a special questionnaire included in the ifo Business Survey in 2016 on the size of German MIttelstand firms. Overall, we find that 70.91 percent of German firms belong to the Mittelstand, which is far less than the numbers reported by the BMWi. Based on this finding, we can conclude that the approximation of the German Mittelstand via the definition of SMEs is inappropriate. Two conclusions can be drawn from our investigation. First, it seems unreasonable to approximate the German Mittelstand to small and medium-sized enterprises. While it is currently impossible to construct reasonable Mittelstand measures from official data sources, other data sources such as the ifo Business Survey (based on our set of Mittelstand questions) or the Creditreform Firm Database allow us to identify Mittelstand firms in an adequate manner. Second, there is quite some variation in Mittelstand quotas across sectors and space; this can be exploited to study the relative performance of Mittelstand firms even on the macro level. 


Hurricanes, Economic Growth and Transmission Channels 

Empirical Evidence for Countries on Differing Levels of Development


with Daniela Wenzel
World Development 115, 2018, 231-247.


While the short-term growth consequences of natural disasters are comparatively well studied, little is known about the long-run perspective. Based on truly exogenous storm indicators, derived from a meteorological database, we show that the growth effects of tropical storms go well beyond the short-term perspective. A disaggregated analysis reveals that the reaction of economic growth to the occurrence of hurricanes depends strongly on the level of development of the afflicted countries with developing countries being most negatively affected. We also consider through which channels tropical storms affect long-run growth and find the investment share as well as fertility to react systematically to tropical storms.

Climate Change, Natural Disasters and Migration
A Survey of the Empirical Literature


with Max Steinhardt

CESifo Economic Studies 63(4), 2017, 353-385.


Climate-induced migration is one of the most hotly debated topics in the current discourse on global warming and its consequences. There is a burgeoning field in economics and other social sciences linking climatic factors or climate-related natural disasters to migration. Existent empirical studies use different measures to quantify migration flows and climatic factors and apply a variety of methodologies to disparate data sets and samples of countries. Our review article aims to provide a unifying perspective over this complex field by structuring the literature and summarizing the empirical findings.

Aggregate Capital Stock Estimations for 122 Countries
An Update


with Jan-Erik Wesselhöft
Review of Economics 68(2), 2017, 75-92.

Using newly available investment data from the World Bank’s World Development Indicators database we provide an update and an extension of the aggregate capital stock estimations provided in (BERLEMANN, M. and J.-E. WESSELHÖFT (2014): Estimating Aggregate Capital Stocks Using the Perpetual Inventory Method: A Survey of Previous Implementations and New Empirical Evidence for 103 Countries, Review of Economics 65(1), 1–34). The new database contains comparable unbalanced panel data for 122 countries and the period of 1960 to 2016.

The Joneses' Income and Debt Market Participation
Empirical Evidence from Bank Account Data


with Jan Salland
nomics Letters 142, 2016, 6-9.


In this paper we study whether the decision to raise debt is related to average income in the own residential area. Based on a unique dataset of bank account data we find that bank customers are more likely to hold collateralized and uncollateralized loans and to make use of the overdraft facility when the comparison income is higher, even after controlling for socio-demographic and financial characteristics. This indicates that conspicuous consumption is partly financed by debt.

Does Hurricane Risk Affect Individual Well-Being?
Empirical Evidence on the Indirect Effects of Natural Disasters


Ecological Economics 124, 2016, 99-113.


While natural disasters might have numerous direct (typically negative) effects, the effect of an increase of natural disaster risk on individual well-being is often neglected. In this paper we study the effects of natural disaster risk on self-reported happiness and life satisfaction at the example of tropical storms. Combining several waves of the integrated European/World Values Survey and appropriate storm data we find a systematically negative effect of hurricane risk on both measures of individual well-being in relatively poor countries in which the population has little possibilities to take protective measures against storms. In highly developed countries, we find a systematic negative and much smaller effect only for life satisfaction. Altogether we conclude that disaster risk tends to play a role for individual well-being, especially on low levels of development.

Long-term Growth Effects of Natural Disasters
Empirical Evidence for Droughts


with Daniela Wenzel
Economics Bulletin 36(1), 2016, 464-476.

The ongoing process of climate change goes along with a higher frequency and/or severity of droughts. While the short-term growth consequences of droughts are comparatively well examined, little research has yet been devoted to the question whether and how droughts affect medium and long-term growth. However, knowledge on the growth dynamics triggered by natural disasters is an influential input factor for integrated assessment models which are used to evaluate climate policy measures. In this paper we deliver empirical support for the hypothesis of the existence of long-run growth effects of droughts. Based on a panel of 153 countries over the period of 1960 to 2002 and employing a truly exogenous drought indicator derived from rainfall data we find significantly negative long-term growth effects of droughts in both highly and less developed countries. We also deliver first empirical evidence on the channels through which droughts affect economic growth.

Regional Importance of Mittelstand Firms and Innovation Performance


with Vera Jahn
Regional Studies 50(11), 2016, 1819-1833.


Despite the deeply rooted belief of politicians all over the world about the important role of Mittelstand firms, there has yet been surprisingly little empirical research on this issue. This article contributes to the literature by studying whether the relative regional importance of Mittelstand firms has an effect on regional innovation performance. Using a cross-section of German NUTS-3 regions, a significantly positive relation between the relative importance of owner-managed small and medium-sized enterprises and patent applications is identified. This finding is highly robust when controlling for spatial correlations as they often occur in highly disaggregated regional analyses.

A Time-Varying Indicator of Effective Monetary Policy Conservatism


with Kai Hielscher
Annals of Economics & Finance 17(1), 2016, 105-132.


Based on an extended version of a time-inconsistency model of monetary policy we show that the degree of effective monetary policy conservatism can be uncovered by studying to what extent central banks react to real disturbances. By estimating central bank reaction functions in moving and overlapping intervals for the period of 1985 to 2007 using an ordered logit approach in a panel setting we derive a time-varying indicator of effective monetary policy conservatism for Canada, Sweden, the UK and the US. Employing this indicator we show that increasing effective conservatism tends to lower inflation without increasing the output gap. However, while a higher degree of effective conservatism does not result in lower inflation uncertainty the variance of the output gap tends to decrease. 

Do Judges React to the Probability of Appellate Review?
Empirical Evidence from Court Procedures


with Robin Christmann

Applied Economics Letters 23(3), 2016, 202-205.


The appellate review system is intended to serve as an efficient remedy for imperfect judicial decision making. However, it can fulfil this task only when appeals are ex ante unpredictable to the judge, and thus can be expected to occur primarily in case of a bad verdict. Using data from case records of a German trial court, we show that the probability of appeal can be predicted based on easily observable exogenous factors. Controlling for the complexity of a legal case, we find that judges also tend to decrease their effort when the ex ante probability of appeal is low. Thus, our empirical evidence indicates an inefficiency in the appellate review system because trial judges allocate their effort to cases not exclusively according to case complexity, but particularly according to the ex ante probability of being reviewed.

Which Factors Drive the Decision to Opt Out of Individual Research Rankings?
An Empirical Study of Adademic Resistance to Change


with Justus Haucap

Research Policy 44(5), 2015, 1108-1115.


Quantitative measures of research output, especially bibliometric measures, have not only been introduced within research funding systems in many countries, but they are also increasingly used in the media to construct rankings of universities, faculties and even individual scientists. In almost all countries, in which significant attempts have been made to quantify research output, parts of the scientific community have criticized the specific procedures used or even protested against them. In 2012, a significant fraction of German business scholars has even opted out of the most important German research ranking for business and economics which is conducted by the Germany's leading business daily Handelsblatt. Using this example, we show that observed resistance to change can consistently be explained by observable factors related to individual cost and benefits of the concerned researchers. We present empirical evidence consistent with the hypothesis that those scholars for whom the costs of a change in evaluation methods exceed the expected benefits are more likely to boycott the ranking exercise.

Unraveling the Complexity of US Presidential Approval
A Multi-dimensional Semiparametric Approach


with Sören Enkelmann & Torben Kuhlenkasper

Journal of Applied Econometrics 30(3), 2015, 468-486.


Empirical studies analyzing the determinants of US presidential popularity have delivered quite inconclusive results concerning the role of economic variables by assuming linear relationships. We employ penalized spline smoothing in the context of semiparametric additive mixed models and allow for flexible functional forms and thus possible nonlinear effects for the economic determinants. By controlling for the well‐known politically motivated covariables, we find strong evidence for nonlinear and negative effects of unemployment, inflation and government consumption on presidential approval. Additionally, we present new results in favor of nonparametric trivariate interaction effects between the macroeconomic covariables.

Monetary Policy and Central Bank Independence under Endogenous Preferences


with Andrea Schneider
Journal of Economic Research 19(2), 2014, 125-136.


In this paper we study the effects of monetary policy under endogenous conservatism. We find a feedback mechanism of macroeconomic outcomes on policy conservatism to destabilize the economy or at least to contribute to considerable adjustment costs. Central bank independence turns out to be a suitable solution to this problem.

The Roots of Inflation Aversion in Transition Countries
Empirical Evidence from the Baltic States


Economic Systems 38(3), 2014, 415-432.


In command economies, inflation is either absent or at least unrelated to supply and demand. However, when the economies in Eastern Europe started transforming into market economies, they suddenly experienced high and volatile inflation rates. Transformation countries are therefore interesting laboratories for studying individual inflation aversion. In this paper we study the level and determinants of individual inflation aversion in the three Baltic countries. Using data from 11 waves of the Eurobarometer survey, we find age, education and the macroeconomic situation to have significant effects on the likelihood to mention inflation among the most important problems facing the country. Moreover, we find the populations of all three Baltic countries to be significantly more inflation averse than the population of the United Kingdom, a western democracy with a long tradition as a market economy. We attribute this finding to the specific experiences of the Baltic populations with inflation.

The Economic Determinants of U.S. Presidential Approval
A Survey


with Sören Enkelmann
European Journal of Political Economy 36, 2014, 41-54.


Even after four decades of research it remains unclear, whether presidential popularity depends on the state of the economy. While about half of all studies for the United States find a significant effect of unemployment and inflation on presidential popularity, the others do not. Additional economic issues have rarely been studied. In this survey article we study the likely causes for the inconclusive findings. While various factors have an influence on the results, especially the choice of the sample period is of crucial importance. While in the very long run we find unemployment and inflation to have a robust effect on presidential approval, this holds not true for shorter sub-periods. This result might indicate that the popularity function is instable over time. However, the findings might also be taken as an indication that the most often employed linear estimation approach is inadequate. Further research on these issues is necessary.

Estimating Aggregate Capital Stocks Using the Perpetual Inventory Method
A Survey and New Empirical Evidence for 103 Countries


with Jan-Erik Wesselhöft
Review of Economics 65(1), 2014, 1-34.


Almost all attempts to construct capital stock data base on some variant of the Perpetual Inventory Method. While various countries employ this method to construct suitable proxies of national capital stocks, the implementation and the underlying assumptions differ considerably, thereby rendering the results internationally incomparable. Only a few attempts to construct internationally comparable capital stock data have yet been undertaken in the scientific literature. In this paper we outline the idea of the Perpetual Inventory Method and deliver a survey of previous implementations of the method. Based on a critical assessment of these implementations we propose a unified approach and construct estimations of aggregate capital stocks for the 1970 to 2010 period for 103 countries.

Positive externalities from active car safety systems

A New Justification for Car Safety Regulations


with Andreas Matthes
Journal of Policy Modelling 36(2), 2014, 319-329.


Policymakers around the globe have opted for high levels of regulation of the market for vehicle safety and declared many vehicle safety systems as mandatory for new cars. In this paper we argue that the delivered justifications for these policies are at least questionable. We add a completely new argument to the discussion and show in a simple theoretical model that vehicle safety systems might cause positive externalities. Based on a large dataset of traffic accidents in Germany we show that the these externalities in fact occur. Based on our estimation results we show that for anti-lock-brakes (ABS) and electronic stability programmes (ESP) the average expected externality exceeds the price of these systems. Thus, the obligation to equip any new car with both ABS and ESP is adequate from an allocative point of view although the official justification for the introduction of these regulations are flawed.

Demographic Change and Bank Profitability 
Empirical Evidence from German Savings Banks

with Marco Oestmann & Marcel Thum

Applied Economics 46(1), 2014, 79–94.


Most European economies will experience significant demographic changes in the decades ahead. Due to low birth rates, populations are shrinking and ageing at the same time. This article explores the impact of demographic change on the banking industry. A unique data set, which contains detailed information on almost 2.5 million accounts in 11 German savings banks, allows us estimating the socio-demographic determinants of retail profitability. Using a simulation model, we predict the development of bank profitability resulting from demographic shifts through 2025. Our central finding is that the effects of population ageing will partially offset the impact of shrinking customer bases. While the decline in the size of the population reduces the customer base, ageing increases profitability per se, as older customers typically generate higher profits for their banks.

Relative Innovative Capacity of German Regions
Is East Germany Still Lagging Behind?


with Vera Jahn

CESifo Forum 14 (4), 2013, 42–50.


The primary aim of this paper is to deliver empirical evidence on the relative innovative capacity of German regions on the NUTS 3-level. Special attention is devoted to the question of whether East German regions, in fact, still perform worse in terms of innovation activity. 

Monetary Policy and Real Estate Prices
A Disaggregated Analysis for Switzerland

with Julia Freese

International Economics & Economic Policy 10(4), 469–490.


Most empirical studies found that monetary policy has a significant effect on house prices while stock markets remain unaffected by interest rate shocks. In this paper we conduct a more detailed analysis by studying various sub-segments of the real estate market. Employing a new dataset for Switzerland we estimate vector autoregressive models and find positive interest rate shocks to have adverse effects on house and condominium prices on the one hand and rental prices on the other. Commercial property prices as stock markets do not react on interest rate variations.

Non-Linear Growth Effects of Taxation
A Semi-Parametric Approach Using Average Marginal Tax Rates


with Peren Arin, Torben Kuhlenkasper & Faik Koray

Journal of Applied Econometrics 28 (5), 2013, 883–899.


One of the major challenges of empirical tax research is the identification and calculation of appropriate tax data. While there is consensus that average marginal tax rates are most suitable for studying the effects of tax policy on economic growth, because of data limitations the calculation of marginal tax rates has been limited to the USA and the UK. This paper provides calculations of average marginal tax rates for the four Scandinavian countries using the methodologies of Seater (1982, 1985) and Barro and Sahasakul (1983, 1986). Then, by pooling the newly calculated tax rates for the Scandinavian countries with the data for the USA and the UK, we investigate the effects of tax policy shocks on the per capita GDP growth rate. Our results suggest that an increase in average marginal tax rates has a negative impact on economic growth. Employing additive mixed panel models with penalized splines as estimation approach, we show that changes in tax rates have nonlinear effects. Increasing average marginal tax rates turn out to be the most distorting at relatively moderate tax rates. 

Effective Monetary Policy Conservatism

A Comparison of 11 OECD Countries


with Kai Hielscher

Scottish Journal of Political Economy 60 (3), 2013, 267–290. 


Empirical studies of the influence of central bank independence and inflation have yet delivered quite inconclusive results. We argue this to be due to the failure to focus an actual central bank independence and to take the degree of conservatism of the government and the central bank into account. In this paper, we propose a new methodology of measuring the joint degree of central bank independence and conservatism from observed central bank behaviour. After applying the method to 13 OECD countries, we find our indicator to be negatively correlated with a legal index of central bank independence, but positively correlated with the turnover rate. As the latter exclusively focuses on factual central bank independence, the remaining difference might be attributed to conservatism.

Forecasting Inflation via Electronic Markets

Some Results from Pilot Market


with Forrest D. Nelson

Annals of Economics & Finance 14 (2), 2013, 363–390.


While there are various techniques of inflation forecasting in use, none of them has proved to deliver consistently more accurate forecasts than the others. That is why most users of inflation forecasts monitor a variety of inflation indicators and forecasts and check them for consistency. This paper aims at contributing to an extension of the methods in use. We show that experimental inflation forecasting markets are highly useful in uncovering market participants’ inflation expectations. We also present evidence from a number of pilot experiments underlining that the proposed method might enrich the arsenal of existing forecasting techniques.




Czech Economic Review 6 (3), 2012, 225–243.


Most central banks around the globe have the primary task to fight inflation. In the light of the fact that at least moderate inflation turns out to have little effect on the economy this is somewhat surprising. In order to understand why many countries have installed central banks which (almost exclusively) focus on fighting inflation it is necessary to understand why people care about inflation. However, comparatively little knowledge is yet available on the individual determinants of inflation aversion. Up to now, empirical (and quite inconclusive) evidence is available for a number of large Western democracies. Moreover, the evidence is mostly drawn from pure cross section data. Thus, it is yet unclear in how far the results depend on the prevailing macroeconomic situation and can be generalized. In this paper we study the individual determinants of inflation aversion in the Czech Republic. Using data from 11 waves of the Eurobarometer survey we find age, political orientation, education and the macroeconomic situation to have significant effects on the revealed preferences towards fighting inflation while income seems not to play a significant role.

Total Factor Productivity in German Regions


with Jan-Erik Wesselhöft

CESifo Forum 13 (2), 2012. 58–65.


In this paper we study – based on a newly constructed dataset of regional capital stocks – whether German regions differ in their technological levels. Based on these results, we analyze the share of the differences in German peremployee GDP can be attributed to differences in technology, and the share resulting from differences in the local supply of input factors.


Tournament Incentives and Asset Price Bubbles

Evidence from a Field Experiment


with Henning Vöpel

Economics Letters 115 (2), 2012, 232-235.


In this note we show at the example of an experimental stock market, conducted on the occasion of the World Soccer Championship 2010 in South Africa, how tournament incentives might contribute to the formation of asset price bubbles.

Output Sensitivity of Monetary Policy and Macroeconomic Performance


with Kai Hielscher

Applied Economics Letters 19 (15), 2012, 1505-1509.


Employing dynamic panel estimation techniques we derive an empirical measure of central banks' degree of output sensitivity. When relating this measure to macroeconomic outcome variables, we find that a decrease in output sensitivity results in larger business-cycle movements and higher medium-term inflation uncertainty. However, the level of inflation is decreased and the output gap is increased.

Fasten Seat Belts: Do Car Safety Systems Cause Externalities?


with Andreas Matthes

Economics Bulletin 31 (4), 2011, 2915–2921


Although traffic safety belongs to the quite intensively regulated sectors, there has been little discussion about the adequacy of the arguments underlying these regulations. We argue that passive and active car safety systems might cause positive externalities for other traffic participants and present empirical evidence in favour of this hypothesis. 

Trade Unionists in Parliament and Macroeconomic Performance

Empirical Evidence from Germany


with Klaus W. Zimmermann

The Economic & Labour Relations Review 22 (3), 101-116.


This article focuses on the role of unionised members of parliament. While unions have a direct effect on the labour market via wage negotiations, they often also take part in political debates. In many countries, significant shares of the members of parliament are also members of a trade union. However, up to now little empirical evidence is available on the extent to which unionised members of parliament try to achieve union-specific goals and thereby influence the macroeconomic conditions of an economy. A recent study for Germany comes to the conclusion that union members in the Bundestag cannot be seen as the parliamentary arm of the trade unions. However, we present contradicting empirical results by showing that, in Germany at least, the degree of unionisation of parliamentary members has a negative impact on economic growth and increases inflation, while unemployment remains unaffected.

ECB Presidency and Inflation Aversion among the Citizens of European Countries

An Empirical Assessment


CESifo Forum 12 (2), 2011, 88–92.


In this article we aim at shedding some light on the degrees of inflation aversion among the citizens of EU member countries. We therefore employ aggregate data collected from the Eurobarometer Survey of the European Commission covering 2007 to 2010.1 After briefly discussing possible causes for inflation aversion, presenting the utilized data, explaining the empirical approach and presenting the estimation results we turn to a discussion of the implications of our results for the question who should become the next ECB president.

The Value of Announcements in Public Goods Experiments

Some Theory and Experimental Evidence


mit Gunther Markwardt & Marcus Dittrich

Journal of Socio-Economics 38 (3), 2009, 421–428.


The paper presents a simple theoretical framework to explain the influence of the possibility to make non-binding announcements on investment behaviour in public goods settings. Our model builds on the idea that voluntary contributions to the supply of a public good might be motivated by some form of joy of giving. We show that the possibility to make non-binding announcements has a positive effect on cooperative behaviour, especially if individual announcements and factual investments are communicated to the players after each round. We also show that this result holds true even though the players have an incentive to overstate their true degrees of cooperativeness. Altogether, our theoretical considerations point in the direction that revealing as much information on individual intentions and factual behaviour as possible enhances cooperative behaviour. These conclusions are broadly confirmed by the results of a series of classroom experiments we present.

The Macroeconomics of Lending of Last Resort


with Michael Zeidler

Review of Economics 59 (3), 2009, 209-225.


Das vorliegende Papier beschäftigt sich mit der Frage, unter welchen Umstanden Zentralbanken Geschäftsbanken Liquiditätshilfen im Sinne eines Lenders of Last Resort anbieten. Wir argumentieren, dass LOLR Transaktionen vorrangig durch das makroökonomische Stabilisierungsziele motiviert sind. Durch die Gewährung von Liquiditätshilfen senkt die Zentralbank die Wahrscheinlichkeit, dass Geschäftsbanken geschlossen werden müssen und reduzieren hierdurch die aus Bankzusammenbrüchen resultierende Unsicherheit über die Hohe des Geldmultiplikators. Dies fuhrt zu einer geringeren Varianz der Inflationsrate und des Outputs einer Volkswirtschaft. Das präsentierte Modell erklärt auch, warum Zentralbanken dazu neigen, vor allem große Geschäftsbanken zu stutzen wahrend kleine Banken tendenziell sich selbst überlassen werden. Schließlich analysieren wir auch die Wirkung von Moral-Hazard-Verhalten auf der Seite der Geschäftsbanken in Folge von potenziellen LOLR Transaktionen durch die Zentralbank. Interessanterweise fuhrt Moral Hazard zu einem höheren Grad an makroökonomischer Stabilität bei gleichzeitig höheren Stabilisierungskosten.

Forecasting the ECB’s main refinancing rate

A field experiment


Economics Letters 99 (2), 2009, 379–383.


When no appropriate markets to derive expectations on economic variables are available surveying methods are often employed. However, surveys suffer from the problem of how to aggregate individual expectations in a reasonable manner. We show at the example of a market on the ECB's main refinancing rate that experimental markets aggregate information quite efficiently and thus are a useful tool in this respect.

Kurzfristige Wachstumseffekte von Naturkatastrophen

Eine empirische Analyse der Flutkatastrophe von August 2002 in Sachsen


with Gerit Vogt

Zeitschrift für Umweltpolitik und Umweltrecht 31 (2), 2008, 209–232.


Die Häufigkeit von Naturkatastrophen hat in den letzten Jahrzehnten deutlich zugenommen. Vor diesem Hintergrund gewinnt die Frage an Bedeutung, welche oekonomischen Konsequenzen mit dem Auftreten von Naturkatastrophen verbunden sind. In der Literatur werden sowohl Argumente fuer positive als auch negative Wachstumseffekte diskutiert. In diesem Aufsatz wird mit Hilfe von oekonometrischen Zeitreihenmodellen untersucht, inwieweit sich die Hochwasserkatastrophe vom August 2002 kurzfristig auf das Wirtschaftswachstum in Sachsen ausgewirkt hat. Den Ergebnissen zufolge ueberwogen die positiven Wachstumseffekte. Ohne die Flutkatastrophe waere das Wachstum des saechsischen Bruttoinlandsproduktes in den Jahren 2002, 2003 und 2004 vermutlich um 0,6, 1,8 beziehungsweise 0,5 Prozentpunkte niedriger ausgefallen.

Unemployment and Inflation Consequences of Unexpected Election Results


with Gunther Markwardt

Journal of Money, Credit & Banking 39 (8), 2007, 1919–1945.


The empirical evidence toward rational partisan theory of business cycles is mixed and thus inconclusive. This is due to the enormous heterogeneity of the existing empirical studies. Only a few of these test explicitly for the central theoretical innovation that post‐electoral blips in economic activity depend on the degree of the electoral surprise. Using polling data we present empirical evidence in favor of rational partisan theory for a panel of OECD countries.

Are Expectations on Inflation and Election Outcomes Connected?

An Empirical Analysis


with Jörg Elzemann

Economics Letters 91, 2006, 354–359.


In this paper we study whether inflation expectations react on variations of election outcome expectations. Using data from 6 countries we show that such a link in fact exists and thus provides empirical evidence supportive to rational partisan theory of business cycles.

Variable Rational Partisan Cycles and Electoral Uncertainty


with Gunther Markwardt

European Journal of Political Economy 22 (4), 2006, 874–886.


Variable rational partisan theory of political business cycles suggests differences in inflation under left-wing and right-wing governments. Fluctuations of economic activity result from uncertainty about the electoral outcome and the exact timing of elections. However, the core hypothesis that post-electoral booms and recessions depend upon the degree of electoral uncertainty has rarely been tested. Using polling data, we provide empirical evidence in favor of the hypothesis of the existence of variable rational partisan cycles.

Destructive Diversity, Inflationary Convergence and the Inflation Criterion

The Way to EMU Reconsidered


Journal of Economic Integration  21 (4), 2006, 681–707.


Since the signing of the Maastricht Treaty, there has been an intensive discussion whether the convergence criteria incorporated into the contract were appropriate to prepare the EU-member-countries for European Monetary Union. We argue that at least inflationary convergence was not a necessary precondition for EMU. This paper aims at analyzing the effects of the inflation criterion with regard to its possible influence on welfare of the EU-member-states during the transitional phase (stage II). It is shown that the inflation criterion can be interpreted as a component of an incentive compatible contract; insofar it has contributed to a decrease in inflation bias during stage II of EMU but played no important role with respect to stage III.

Time Inconsistency of Monetary Policy

Empirical Evidence from Polls


Public Choice 125 (1-2), 2005, 1–15


While the basic model of time inconsistency, put forward by Barro and Gordon (Barro, R. J., & Gordon, D. B. (1983). Journal of Political Economy, 91, 589–610) is widely accepted now, several authors have expressed serious doubts about the empirical relevance of the model in explaining inflation. Interestingly enough, few attempts have been made so far to test for the existence of inflationary biases empirically. Theory predicts a positive correlation between a monetary authority's relative preference for the high employment goal and inflation. Using polling data from six countries as a proxy for public preferences we provide empirical evidence in favor of the Barro-Gordon-model.

Liability Rules, Physicians’ Care and Patients’ Compliance


Review of Economics  55 (3), 2005, 290–307.


In this paper we study the incentive effects of different liability rules on physicians' and patients' careful behavior during medical treatments. We show in an appropriate framework that there are at least no allocative arguments in favor of a reform of physicians' liability law from a system of negligence towards a system of strict liability.

Blooming Landscapes in East Germany?


with Marcel Thum

CESifo Forum  (4), 2005, 16–27.


Before Soviet Leader Mikhael Gorbachev propagated fundamental reforms in the Eastern bloc, the prospect of German reunification had widely been regarded, within both east and west Germany, as a distant hope rather than a concrete policy option. When the wall came down and German unification became a realistic option, Germany was not well prepared for this enormous task. While several reunification scenarios were initially discussed, the German states opted for rapid political and economic integration. German Chancellor Helmut Kohl promised “blooming landscapes” to evolve in east Germany within a short period of time.1 What actually has happened in the 15 years that have passed since German unification? How did the east German economy develop? We will discuss the east German convergence process, the main economic barriers to a speedier development and the future challenges for the east German economy.

Lending of First versus Lending of Last Resort

Lessons from the Bulgarian Financial Crisis 19967/1997


with Nikolay Nenovsky

Comparative Economic Studies 46 (2), 2004, 245–271.


In 1996/1997 Bulgaria was hit by a severe financial crisis, spreading from a banking crisis to a currency crisis. We argue that the Bulgarian Financial Crisis might serve as an illustrative example of a twin crisis involving both a currency and a banking crisis. While the Bulgarian Crisis had some properties of the so-called fundamental crises, as explained by first-generation models of currency crises, the severity of the crisis was primarily (but not only) due to systematic and path-dependent moral hazard behaviour of the banking sector. Special attention is paid to the crucial role the Bulgarian National Bank played in the pre-crisis and crisis periods when acting more as a lender of first resort rather than a lender of last resort (LOLR). We also show how Bulgaria managed to overcome the crisis by introducing a second-generation currency board allowing the central bank to act strictly as a limited LOLR, thereby making the country less prone to a financial crisis in the future.

Use of experimental markets for predictions


with Tomas Cahlik, Michal Hlavacek & Adam Gersl

Czech Journal of Economics & Finance  11, 2002, 625–636.


According to the efficient market theory, a stock’s price on an effective market is the best measure of the stock’s current value. This is the basic assumption of prediction making according to experimental markets. The authors present descriptions of the first experimental market organised in the Czech Republic and an experimental political market for the parliamentary elections held in the Czech Republic in June 2002.


Wahlbörsen versus traditionelle Meinungsforschung

Die Sachsenwahl 99


LIST Forum für Wirtschafts- und Finanzpolitik  1, 2000, 51-70.


Traditionell werden Prognosen über den Ausgang von politischen Wahlen aus Befragungsdaten gewonnen. Seit etwas mehr als einem Jahrzehnt beschäftigen sich auch Ökonomen vermehrt mit der Frage, wie eine gute Wahlprognose gewonnen werden kann. Als Instrument hierzu wurde die politische Wahlbörse entdeckt, an der Aktien für politische Parteien gehandelt werden. Im Rahmen der vorliegenden Arbeit werden beide Verfahren der Wahlprognose kurz vorgestellt und miteinander verglichen. Am Beispiel der Wahlbörse zur Landtagswahl 1999 in Sachsen wird gezeigt, daß die Ergebnisse von Wahlbörsen recht vielversprechend sind, jedoch durchaus noch Raum für Verbesserungen besteht.

Moral Hazard im Gesundheitswesen

Ein Beispiel aus der Kieferorthopädie


with Alexander Karmann

Zeitschrift für Wirtschafts- und Sozialwissenschaften  118, 1998, 573–595.


The paper starts with an analysis of the market of health services. We show that moral hazard is supposed to push up health costs above the efficient level. With an example of the market of orthodontic treatments in Germany we show how actual regulation promotes moral hazard. In addition to that we provide some empirical evidence supporting the thesis of the existence of massive moral hazard effects in the market of orthodontic treatments. The paper closes with some conclusions concerning future health policy.


Zur Effizienz kieferorthopädischer Behandlungen

Eine Ökonomisch-empirische Analyse


with Alexander Karmann
Gesundheitsökonomie & Qualitätsmanagement 2, 1998, 41-45.


This paper aims at analysing whether there is an optimal time of orthodontic treatment from the economic point of view, especially whether early treatments are relatively cheap. Furthermore we examine whether there are differences in the efficiency of different orthodontic practices. Data from 770 finished orthodontic treatments do not support the early-treatment-hypothesis. We find excessive differences in efficiency of the different orthodontic practices that can not be explained by different preferences for methods of treatment. It can be argued, that both phenomenons can be put down to the fact that the presently used pricing-mechanism for orthodontic treatments is inefficient.



Michael Berlemann & Alexander Karmann (1998)

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