Has the Euro Changed Business Cycle Synchronization?Evidence from the Core and the Periphery

Using a Bayesian dynamic factor model, I examine the comovement of output, investmentand consumption growth among Euro area countries before and after the introduction of theEuro. For that purpose, I compare a pre-Euro period (1991–1998) to a Euro period(2000–2010) and identify a common Euro factor for each period separately. I find thatthe comovement of main macroeconomic variables and the common factor increases forcore Eurozone countries from the first to the second period, while it decreases for mostperipheral economies. This can be interpreted as a rise in business cycle synchronizationfor the core and a respective decline for the periphery.Different to the implications made by the endogeneity argument of currency areas(Frankel and Rose, 1998), my evidence suggest that the introduction of the Euro hasfostered imbalances between core and peripheral Eurozone countries.European business cycles, Euro, optimum currency area, core and periphery, dynamic factor analysis

Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany

Using rich linked employer–employee data for (West) Germany between 1996 and 2014, we conduct a decomposition analysis based on recentered influence function (RIF) regressions to analyze the relative contributions of various plant and worker characteristics to the rise in German wage dispersion. Moreover, we separately investigate the sources of between‐plant and within‐plant wage dispersion. We find that industry effects and the collective bargaining regime contribute the most to rising wage inequality. In the case of collective bargaining, both the decline in collective bargaining coverage and the increase in wage dispersion among the group of covered plants have played important roles

Transatlantic Trade and Investment Partnership (TTIP). Who benefits from a free trade deal? Part 1: Macroeconomic effects. Bertelsmann Studies

This first part of the study is devoted to the macroeconomic effects of a Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the USA. For this purpose, empirical models of the world economy were used to clarify two essential scenarios: (i) the elimination of tariffs in trade between the EU and the USA, and (ii) a liberalization that goes far beyond just eliminating tariffs at a scale that can be measured for comparable and actually existing free-trade agreements. Our approach differs from the traditional way of dealing with subject in that the comprehensive scenario (ii) is defined using measurable experience with similar agreements, not guesses about what is considered politically possible. Our results thus show potentials against which the success of the agreement can be measured ex post facto

Increasing Wage Inequality in Germany: What Role Does Global Trade Play?

Germany is in the midst of a debate on economic inequality and distribution of wealth. People frequently mention a division in society: Some groups find themselves facing stagnating or even falling real wages, while others benefit from economic growth and the shifting shortages on the labor market. What factors can these developments be attributed to

States, Branches of Industry and Education Levels. Who will Benefit in Germany from a Transatlantic Trade and Investment Partnership (TTIP)? Final Report, Part 2: Microeconomic Effects in Germany

In the first part of this study we examined the macroeconomic effects of a transatlantic trade and investment partnership (TTIP) between the European Union and the USA1. The main focus was on changes in trade structure, real income and employment provoked by the TTIP. Using a general equilibrium model, aggregated effects were examined for more than 120 countries. Adaptation of the aggregated price index in all these countries and the feedback effects on gross domestic products were considered in doing so, as was the full matrix of trade effects (even those between countries only indirectly affected) and thus all worldwide trade diversion effects. However, the broad geographic scale and the focus on macro-economic results made it impossible to draw more precise conclusions within individual countries. The second part of the study is intended to close that gap for Germany