Tax contracts and elections

In this paper we examine the impact of tax contracts as a novel institution on elections, policies, and welfare. We consider a political game in which three parties compete to form the government and voters may behave strategically. Parties have policy preferences about the level of public-good provision and benefit from perks when in office. A government raises taxes for both purposes. We show that tax contracts yield moderate policies and lead to lower perks by avoiding the formation of grand coalitions in order to win government. Moreover, in polarized societies they unambiguously improve the welfare of the median voter.     

Whose trades convey information? Evidence from a cross-section of traders

This paper contributes empirically to our understanding of informed traders. It analyzes traders’ characteristics in a foreign exchange electronic limit order market via anonymous trader identities. We use six indicators of informed trading in a cross-sectional multivariate approach to identify traders with high price impact. More information is conveyed by those traders’ trades which—simultaneously—use medium-sized orders (practice stealth trading), have large trading volume, are located in a financial center, trade early in the trading session, at times of wide spreads and when the order book is thin.     

Does globalization restrict budgetary autonomy?

Does globalization restrict the leeway for national budgetary policy? With the help of cluster and discriminant analysis this study provides evidence on the basis of the experience of OECD countries since the 1970s. The results suggest that while globalization does indeed matter for government budgets, substantial room is left for individual national policies particularly with regard to public expenditure structure and public debt.     

The diversity of forecasts from macroeconomic models of the US economy

This paper investigates the accuracy and heterogeneity of output growth and inflation forecasts during the current and the four preceding NBER-dated US recessions. We generate forecasts from six different models of the US economy and compare them to professional forecasts from the Federal Reserve??s Greenbook and the Survey of Professional Forecasters (SPF). The model parameters and model forecasts are derived from historical data vintages so as to ensure comparability to historical forecasts by professionals. The mean model forecast comes surprisingly close to the mean SPF and Greenbook forecasts in terms of accuracy even though the models only make use of a small number of data series. Model forecasts compare particularly well to professional forecasts at a horizon of three to four quarters and during recoveries. The extent of forecast heterogeneity is similar for model and professional forecasts but varies substantially over time. Thus, forecast heterogeneity constitutes a potentially important source of economic fluctuations. While the particular reasons for diversity in professional forecasts are not observable, the diversity in model forecasts can be traced to different modeling assumptions, information sets and parameter estimates.     

Innovativer Energiespeicher Bundeswasserstraßen

The present analysis provides a contribution to the question of how a system integration of large-scale energy storages can be implemented. It is to be investigated if and how federal waterways can be used for this purpose. Initially, a baseline study was carried out in which the federal waterways are systematically assessed with regard to their suitability for/as energy storage systems. Apart from the technical and the hydro mechanical implementation of the storage process, the advantages and disadvantages of the federal waterways in comparison to conventional pump storage stations play a significant role. A presentation and classification of the potentially available canal sections provides an overview of the suitable storage systems of the federal waterways. A specifically designed storage simulation on the basis of a sample application is used, in order to determine the capacity of the canal system for energy storage. Consequently, the simulation showed the theoretical capability of the federal waterways as energy storage systems, through their ability to balance the load and temporal fluctuations of the energy input. The simulation program Matlab was used on the basis of the synthetic load and delivery profiles. Finally, based on the example of the ships lock in Uelzen and the Scharnebeck boats lift, a simulation of the possible re-equipping options will be described, technically abstracted, economically analysed and combined with renewable energy facilities within a virtual power plant. The detailed formulation of further approaches and the calculation of possible application scenarios play a central role within this analysis.     

Viewing Tax Policy Through Party‐Colored Glasses: What German Politicians Believe

Abstract. The process of globalization has an important impact on national tax policies. Most of the literature does not focus directly on the political decision‐making process and assumes that the desired tax policy is responding to objective underlying tradeoffs. Based on an original survey of members of the German national parliament (Bundestag) in 2006/07, we document a strong ideological bias among policy‐makers with respect to the perceived mobility of international tax bases (real capital and paper profits). Ideology also influences, directly and indirectly, the perceived national autonomy in tax setting and preferences for a European Union minimum tax for companies. There seems little consensus as to what the efficiency costs of capital taxation in open economies are, even though our survey falls in a period of extensive debate about, and actual adoption of, a company tax reform bill in Germany.