Uniquely amongst industrialized countries worldwide, Germany does not im-pose a general speed limit on highways. This is different in the Netherlands, where a limit of 130km/h is implemented. The direct border between the two countries provides an opportunity to construct a natural experiment and analyze the social impact of a general speed limit of 130 km/h for passenger cars on German high-ways. I quantify the social welfare impacts from travel time, accident victims, fuel consumption and emissions for two highway sections in the federal state of North Rhine-Westphalia, Germany. The results are obtained by a descriptive comparison of micro data on travel speeds and accidents, collected on the two designated cross-border highways. In the central case, I conclude that on both highways a speed limit would be beneficial from the social and private perspective. The impacts found on the two highways differ in magnitude, but the qualitative decisions are identical and sufficiently robust to their core assumptions.

Long-term inflation expectations taken from the Survey of Professional Forecasters are a major source of information for monetary policy. Unfortunately, they are published only on a quarterly basis. This paper investigates the daily information content of inflation-linked swap rates for the next survey outcome. Using a mixed data sampling approach, we find that professionals account for the daily dynamics of inflation swap rates when they submit their long-term inflation expectations. We propose a daily indicator of professionals’ inflation expectations that outperforms alternative indicators that ignore the high-frequency dynamics of inflation swap rates. To illustrate the usefulness of the new indicator, we provide new evidence on the (re-)anchoring of U.S. inflation expectations.

This paper uses SOEP data to study the distributional e ect of intergenerational trans- fers on the wealth distribution of German households. Similar to most other central Eu- ropean countries, Germany is likely to face a period of increasing aggregate bequest ows. At the same time, there is an ongoing debate on the distributional implications of such wealth shocks. This study adds to the discussion by providing causal estimates for the e ect of transfer receipt on the savings behavior of households. The model allows for dynamic adjustment and variations in the savings behavior over the wealth distribution. I use the estimates to decompose the overall e ect of transfers on wealth inequality in the e ect of the aggregated transfer volume, the transfer incidence over the wealth distribution and the e ect of the savings behavior. The results are very much in line with the literature, indicating that transfers tend to equalize wealth inequality, despite minor variations in the savings behav- ior over the wealth distribution and despite a strong relationship between initial household wealth and transfer accrual.

On the occasion of related proposals by the European Commission and the Eurogroup, this paper proposes to entrust the ESM with the hosting of the ESRB in the medium term. The novel proposal aims at strengthening the macro-prudential expertise of the ESM and at enhancing the independence of the ESRB. Following a brief summary of related proposals, the main rationales and the key elements of the proposal are presented in detail.

Existing literature on cross-national variation in violence has paid little attention to the transnational transmission of crime. One such channel are the forced returns of migrants with a criminal record in their countries of temporary residence. Responding to this research gap, we study the effect of US deportations of convicts on levels of violent crime in deportees’ countries of origin for a cross-country panel of up to 123 countries covering the years 2003 to 2015. We find a strong and robust effect of criminal deportations on homicide rates in countries of origin, that is to a large degree driven by deportations towards Latin America and the Caribbean. An additional inflow of ten deportees with a criminal history per 100,000 increases expected homicide rates by more than two. In addition to controlling for country-specific fixed effects, we provide evidence on a causal effect using an instrumental variable approach, that exploits spatial and time variation in migrant populations’ exposure to state level immigration policies in the US

El Salvador, Honduras and Guatemala count among today’s most violent countries of the world. Qualitative research has claimed that large-scale deportations of Central American convicts have played an important role for the spread of gangs and rampant violence in the region. Using a novel identification strategy, this paper provides the first econometric evidence for this hypothesis from the case of El Salvador. Regarding the dependent variable, the policy experiment of a truce between rivaling gangs in 2012 allows to single out gang-related killings from overall homicide rates. The explanatory variable exploits subnational variation in the exposure of migrant communities to exogenous conditions in the host country. Violence spilled over to migrants’ places of origin when migrant corridors developed around US destinations with high pre-existing levels of violent crime. The cross-sectional evidence is backed by panel data analysis dating back to 1999. The annual inflow of convicts translated into rising homicides mainly in those municipalities whose migrants were exposed to high pre-existing crime at destination, whereas deportations of non-convicts did not have the same effect. These finding are in line with evidence on the origin of Central American gangs in US cities and convicts’ return to their places of birth after massive deportations since the mid-1990s.

In Spence’s (1973) signaling by education model and in many of its extensions, firms can only infer workers’ productivities from their education choices. In reality, firms also use sophisticated pre–employment auditing to learn workers’ productivities. We characterize the trade–offs between signaling by workers and costly information acquisition by firms. Information acquisition is always associated with (partial) pooling of worker types, and education is used as a signal only if relatively few workers have low productivity. Our analysis applies also to other signaling problems, e.g. the financial structure of firms, warranties, and initial public offerings.

Rising poverty and inequality increases the risk of social instability in countries all around the world. For measuring poverty and inequality there exists a variety of statistical indicators. Estimating these indicators is trivial as long as the income variable is measured on a metric scale. However, estimation is not possible, using standard formulas, when the income variable is interval censored (or grouped), as in the German Microcensus. This is the case for numerous censuses due to confidentiality constraints or in order to decrease item non-response. To enable the estimation of statistical indicators in these scenarios, we propose an iterative kernel density algorithm that generates metric pseudo samples from the interval censored income variable. Based on these pseudo samples, poverty and inequality indicators are estimated. The standard errors of the indicators are estimated by a non-parametric bootstrap. Simulation results demonstrate that poverty and inequality indicators from interval censored data can be unbiasedly estimated by the proposed kernel density algorithm. Also the standard errors are correctly estimated by the non-parametric bootstrap. The kernel density algorithm is applied in this work to estimate regional poverty and inequality indicators from German Microcensus data. The results show the regional distribution of poverty and inequality in Germany.

Competing definitions of justice in Plato’s Republic and Aristotle’s Politics indicate the existence of two distinct economic systems with different normative priorities. The three-class society of the Platonic economy (guardians, auxiliaries, producers) gives rise to guardians who by virtue are expected to enforce output targets on producers directly or through auxiliaries. The three-class society of the Aristotelian economy (rich, middle, poor) facilitates the emergence of different ruling coalitions and compensates efficiency losses of vertical production processes with political gains derived from representative governance. In the Aristotelian economy, the middle class is better off than in the Platonic economy (auxiliaries), because a just society (polity) is achieved under its rule. I argue that the equilibrium solutions of the Platonic and Aristotelian systems provide the normative foundations for the distinction between plan and market.

Proxy wars are a key pattern of political conflict and interstate competition. Rather than resorting to direct conflicts, which are costly and entail a higher level of uncertainty, governments may opt for proxy wars, which may last longer, but are less costly and render them more immune to exogenous shocks. We start with the modeling of a direct war with two players where a static equilibrium may be neither realizable nor sustainable in the long run. Then, we offer a model of proxy war where the proposed equilibria are realizable, but not always sustainable in the long run. The consolidation level of the double principal-agent relationship predicts the continuation of conflict and thus the emergence of peace.

The transformation of area aggregates between non-hierarchical area systems is a standard problem of official statistics. We introduce a new method which is based on kernel density estimates. It is a modification of the SEM algorithm proposed by Gross et al. (2016), which was used for the transformation of totals on rectangular areas to kernel densities estimates. As a by-product of the routine one obtains simulated geo-coordinates for each unit. With the help of these geo-coordinates it is possible to calculate case numbers for a new area system. The method is applied to student resident figures from Berlin. These are known only at the level of ZIP codes but they are needed for administrative planning districts. Our method is evaluated on a similar, simulated data set with known exact geo-coordinates. In the empirical part results for changes in the student residential areas between 2005 and 2015 are presented. It is demonstrated that the transformation via kernel density estimates offers additional useful features to display concentration areas.

This project re-investigates the hookworm eradication efforts of the Rockefeller Foundation’s Sanitary Commission (RSC) in the American South during the Progressive Era. The RSC worked to eradicate hookworm across 11 southern states between 1911 and 1915, efforts that have been linked to dramatic short- and long-term increases in human capital and labor productivity. Although useful from an identification standpoint, these single- shot interventions, in the absence of cooperative efforts to improve underlying conditions, have a mixed record of long-term effectiveness across public health research. The efficacy of deworming campaigns in particular has come under extensive scrutiny. The experience of the American South had stood as example of how a single-shot hookworm eradication program has improved outcomes; however, the robustness of this result has also recently come into question. A replication of the Bleakley (2007) seminal work investigating hookworm eradication finds faults with the robustness and interpretations of the results (Roodman 2017), and an investigation into the activities of the RSC has determined them unevenly distributed across hookworm-affected areas (Elman et. al 2013). Perhaps not coincidentally, the RSC’s hookworm eradication program was not the only public health intervention that occurred in the rural South during the Progressive Era. Rural public health centers spread throughout the American South during this period, partially backed by the Rockefeller Foundation. Given the use of difference-in-difference methods using decennial census data, and the participation of the Rockefeller Foundation in the funding of these rural health centers, this is a potentially critical omission in the evaluation of the RSC efforts. In this project, we investigate the connection between these rural health centers and the Rockefeller Foundation’s hookworm eradication efforts, consider whether their presence explains effects attributed thereto, and examine their importance as a follow-up program to the initial hookworm intervention.

In this paper, we explore the long-run effects of cultural and imperial legacies in the Baltic region. Drawing evidence from the 1897 population census in the Russian Empire, we find that localities with a higher share of German historical population are inclined to be more developed in contemporary Latvia and Estonia. Furthermore, based on the Life-In-Transition Survey (LiTS), we use robust regression discontinuity and identify persistent differential patterns of socioeconomic and political preferences across the borders of the former imperial territories of Estland, Livonia (Swedish Livonia), Letgallia (Polish Livonia) and Courland. Hence, we argue for the persistence of legacies as drivers of divergent development paths in the regions of Latvia and Estonia.

Applied time series research often faces the challenge that (a) potentially relevant variables are unobservable, (b) it is fundamentally uncertain which covariates are relevant. Thus cointegration is often analyzed in partial systems, ignoring potential (stationary) covariates. By simulating hypothesized larger systems Benati (2015) found that a nominally significant cointegration outcome using a bootstrapped rank test (Cavaliere, Rahbek, and Taylor, 2012) in the bivariate sub-system might be due to test size distortions. In this note we review this issue systematically. Apart from revisiting the partial-system results we also investigate alternative bootstrap test approaches in the larger system. Throughout we follow the given application of a long-run Phillips curve (euro-area inflation and unemployment). The methods that include the covariates do not reject the null of no cointegration, but by simulation we find that they display very low power, such that the (bivariate) partial-system approach is still preferred. The size distortions of all approaches are only mild when a standard HP- filtered output gap measure is used among the covariates. The bivariate trace test p-value of 0.027 (heteroskedasticity-consistent wild bootstrap) therefore still suggests rejection of non-cointegration at the 5% but not at the 1% significance level. The earlier findings of considerable test size distortions can be replicated when instead an output gap measure with different longer-run developments is used. This detrimental effect of large borderline-stationary roots reflects an earlier insight from the literature (Cavaliere, Rahbek, and Taylor, 2015).

Peru has made great progress in reducing poverty and inequality in the past decade alongside high economic growth. Albeit this progress, the incidence of poverty and inequality remain high. This paper examines the distributional and poverty impact of the public tax and transfer system in Peru. It applies an extended income approach that accounts for the value of publicly-provided health, education and childcare services. Accounting for public services is important since unequal access to basic services is a main development challenge for low and middle income countries. We find that public social spending reduces overall inequality by almost 7 Gini points. This reduction is mainly driven by in-kind bene fits while the impact of taxation and direct cash transfers is small. Income differentials within regions explain approximately four fifths of overall inequality compared to diffierences between regions, which explain about one fifth. This ratio remains largely unaffected by public redistribution. Mean levels of welfare vary widely across regions. This is also because social spending achieves litte poverty reduction. It decreases absolute poverty by 2-3 percentage points in terms of monetary income and up to 9 percentage points or 25% when accounting for public service use. The largest share of the poor, over 50%, are not reached by social assistance. To tackle poverty more effectively, transfer levels and coverage need to be increased. Current policies seem insuffcient to achieve a more equitable income distribution.

Map-based regional analysis is interested to detect areas with a large concentration of certain populations. Here kernel density estimates (KDE) offer advantages over classical choropleth maps. However, kernel density estimation needs exact geo-coordinates. In a recent paper Groß et al. (2017) have proposed a measurement error model which uses local aggregates for kernel density estimation. Their algorithm simulates "exact" geo-coordinates which reflect the information on the aggregates. In this article we suggest two extensions of this approach. First, we consider boundary constraints, which are usually ignored in the KDE framework. This concerns not only the outer limits of a municipality but also unsettled regions within a city like parks, lakes and industrial areas. Without a boundary correction standard KDEs underestimate the density in the vicinity of boundaries. Here we propose a modification of the original algorithm which uses rescaled kernel functions. Regional maps often display local percentages, for example, voters for a special party among all voters in each voting district. Here we derive a smooth representation of percentages which is based on the ratio of two densities. Again, the original algorithm is modified to cope with the estimation of a ratio of two densities. Our empirical examples refer to voting results from Berlin. It is shown that the proposed methodology reveals a lot of regional insight which is not produced by standard choropleth maps.

This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer’s need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and (iii) limited liability of the expert precludes imposing penalty payments on him. We characterize payments under the optimal contract and show that, compared with the first-best, these induce inefficient undertreatment. We further show that separating diagnosis and treatment increases consumer surplus. Whether it decreases or increases the likelihood of undertreatment, however, depends on the accuracy of the expert’s information.