Eurokrise: Erneute Atempause ist kein Grund zum Ausruhen

The current state of affairs in the euro area (EA) instills hope in economic recovery but also substantial concern. The crisis countries have made considerable, albeit quite uneven, progress in central areas of reform. Yet severe obstacles remain. Moreover, European policy makers have reformed the EA’s institutional framework to strengthen its resilience. Yet important elements of a stable architecture are still missing, and it remains unclear whether the EA is moving towards full integration or a Maastricht 2.0. Most importantly, since it has become impossible to construct a viable fi scal bridge due to the success of the OMT programme, now everything depends on the perseverance of domestic reform policies.     

How price complexity takes its toll: The neglected role of a simplicity bias and fairness in price evaluations

Marketing managers commonly employ complex price plans. Surprisingly, limited and conflicting evidence reports how customers perceive and react to complex prices. This study examines perceptions about price complexity and shows that customers tend to prefer simple prices. Two experimental studies show that perceived price complexity negatively affects customer perceptions of price fairness and influences product choice because customers negatively evaluate the transparency of the firm's pricing practices and infer higher total prices. Customers comparing alternate offerings may therefore prefer simple over complex prices, even when the latter are less expensive. Study results suggest limiting price plan variations positively affects customer inferences about transparency and fairness, and thus customer choice.     

Information dissemination on intellectual capital in mergers and acquisitions: purchase price allocations,press releases and business press

In order to reduce information asymmetries in relation to a firm's current decisions and long-term strategy, firms must consistently provide information to stakeholders. This paper investigates intellectual capital (IC) information disclosed in mergers and acquisitions (M&A) provided through three different disclosure channels (voluntary press releases, related newspaper articles and subsequent mandatory corporate disclosures in the notes to the financial statements). For a sample of 215 randomly selected US and European M&As, we analyse 215 press releases, 1025 newspaper articles and 215 purchase price allocations. Our findings suggest that IC disclosure in press releases is not perceived as informative and qualitative forward-looking IC information in voluntary corporate disclosures appears to lack credibility. Moreover, we empirically demonstrate interdependencies across the three disclosure channels. The business press seems to filter IC information provided in press releases. The amount of IC disclosure in the notes to the financial statements is positively associated with prior IC disclosure in newspaper articles, but negatively associated with IC disclosure in press releases. The managements of acquirer firms appear to pay attention to news coverage and public opinion. However, both voluntary and mandatory corporate disclosures appear to substitute rather than complement each other.     

Forecasting real estate prices in Germany: the role of consumer confidence

The aim of the paper is to analyse the forecasting ability of various potential predictors for real estate prices in Germany over the short term. In the wake of the financial crisis, real estate prices in Germany started to increase markedly and still did so by the end of 2013. Despite a number of fundamental reasons, e.g. favourable lending conditions and Germany’s rapid return to economic growth, this provoked a discussion on whether consumers have too gloomy expectations regarding real estate prices in future. To capture the role of expectations for predicting real estate prices, in our forecast evaluation, we put special emphasis on various components of consumer confidence. Using single indicator models, we find that households’ perceived financial situations as well as their intended consumption/saving plans serve as valuable real estate price predictors.     

Economics at the FTC: Office Supply Retailers Redux,Healthcare Quality Efficiencies Analysis,and Litigation of an Alleged Get-Rich-Quick Scheme

We discuss in this essay three of the matters on which economists in the Bureau of Economics (BE) at the Federal Trade Commission have worked this past year. BE revisited familiar ground in the first matter, a proposed merger of office supply retailers. The second part of the essay considers efficiency claims in health care mergers, with focus on the acquisition of a physician group by a health care system in Idaho. The final part of the essay discusses empirical work that was undertaken by the Bureau to investigate claims made by marketers of an alleged get-rich-quick scheme.     

Monetary dynamics: a market approach

The behaviour of the short-run responses implied by the identification of a long-run money demand relationship is examined. These responses have recently been interpreted as representing the policy stance of the monetary authority. However, as movements in the monetary aggregate reflect both demand and supply adjustments, estimating the short-run dynamics solely within the money demand relationship may produce biased results. In order to address this issue, the paper explicitly acknowledges the importance of the supply of money function by including the function alongside the demand for money function. While the interaction of the two equations continues to produce the long-run quantity theory result, the additional detail provides more accurate estimates of the individual short-run adjustments within the two equations.     

Financial intermediation and the role of price discrimination in the foreign exchange market

Foreign exchange trading is performed in opaque and decentralized markets. The two-tier market structure consisting of a customer segment and an interdealer segment to which only market makers have access gives rise to the possibility of price discrimination. We develop a theoretical pricing model that accounts for market-power considerations and analyze a database of the trades of a foreign exchange market maker. We find that the market maker generally exerts low bargaining power vis-á-vis customers. The dealer earns lower average spreads on trades with financial customers than commercial customers, even though the former are perceived to convey exchange-rate-relevant information.