Stock market participation jumped upwards in Germany in the year 2020 by about 25%. A major cause for this was the enforced use of remote work. We show this by repeating a benchmark study with demanding data requests and adding remote work to the explanatory variables. Moreover, we implement an instrumental variables estimation based on commuting distance and work-from- home capacity. The...
Join us for an insightful presentation on the global impact of COVID-19 on public debt and the challenges it poses for policymakers. This lecture explore the effectiveness of different approaches to reducing debt-to-GDP ratios, considering econometric analyses and historical experiences. Followed by a discussion. Key findings include: Fiscal consolidations: Timely and well-designed fiscal...
This paper investigates the unique ways in which individuals assimilate new information into their beliefs about stock returns and examines the consequences of heterogeneous information processing on savings and investment decisions. Utilizing two exogenous information treatments from 2017 and 2018 surveys of German households, I discover that individuals' short-term return expectations shift by...
How does a monetary union alter the impact of business cycle shocks at the household level? We develop a Heterogeneous Agent New Keynesian model of two countries (HANK2) and show in closed form that a monetary union shifts the adjustment to a shock horizontally—across countries—within the brackets of the union-wide wealth distribution rather than vertically—that is, across the brackets of the union-wide ...
Negative policy rates can convince markets that deposit rates will remain lower-for-longer, even when current deposit rates are constrained by zero. This is the signalling channel of negative interest rates. We analyse the optimality and effectiveness of negative rates in the context of this novel transmission channel. In a stylized model, we prove two necessary conditions for optimality: time-consistency ...
We examine the causal relationship between US monetary policy shocks, exchange rates and currency excess returns for a sample of eight advanced countries over the period 1980M1 to 2022M11. We find that the dynamics of the US dollar exchange rate is the main driver of currency excess returns. The exchange rate is significantly affected by US monetary policy shocks, where the persistence of this shock ...