Contributions published at Department of Economics (Florian Scheuer)

We give a direct proof of W. W. Breckner's result that Breckner s-convex real-valued functions on finite dimensional normed spaces are locally s-Hölder.

The present paper applies a theoretical two-sector three-factor model to analyze a variety of energy tax reforms with the common feature of at least partly exempting the energy-intensive export sector from the tax. As a result, all scenarios with exemptions reduce energy less than the non-discriminating textbook version of the energy tax. Moreover, in the two scenarios that exemplify typical attributes of the tax reforms in Germany and Denmark, an increase in total energy use is possible. This is due to a positive output effect resulting from a substitution of the energy-intensive for the labor-intensive commodity.

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Health policy makers know that their decisions affect the chances of well-being and survival of individuals and that they implicitly are valuing human lives. Evidence with regard to willingness-to-pay (WTP) informs about the value individuals themselves put on these chances; it thus holds the promise of contributing to consistent decisions that lead to an improved benefit-cost ratio of health services for (potential) patients. However, such improvement is more likely if information about WTP is used by competing health insurers rather than the government.

This contribution purports to come up with reform proposals that promise to improve the benefit-cost ratio in health from the point of view of taxpayers and (potential) patients. It starts by noting that a high and increasing share of health care expenditure in the GDP does not per se indicate a need for reform. Rather, the guiding idea is that decisions in the health care sector should be tied more closely to the preferences of consumers, who must obtain more ways to express their willingness-to-pay. The 10 proposals are directed to health insurers, physicians and medical associations, hospital management, and policy makers proper. Moreover, initial steps for implementing them are sketched, such as abolishing the division of lines in the regulation of (private) insurance, freeing health insurers from any-willing-provider clauses, refraining from imposing uniform nationwide fee schedules, and directly subsidizing poor consumers for buying health insurance rather than institutions such as hospitals and homes for long-term care.

This article is concerned with the analysis of correlated count data. A class of models is proposed in which the correlation among the counts is represented by correlated latent effects. Special cases of the model are discussed and a tuned and efficient Markov chain Monte Carlo algorithm is developed to estimate the model under both multivariate normal and multivariate-t assumptions on the latent effects. The methods are illustrated with two real data examples of six and sixteen variate correlated counts.

We present results of a negative binomial model on the determinants of the number of days of absence in a given year for a sample of 2049 workers drawn from three factories. We find evidence of the terms of the remuneration contract being important and we offer an interpretation of the differential effect of the company sickpay scheme on the behaviour of workers contracted to work four or five days a week.

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This paper establishes stylized facts about business cycles in the late 19th century, using spectral analysis techniques which allow an intuitive description and analysis of cyclical structure in economic fluctuations. Analysis of industrial production data for 13 countries permits the following generalizations. In the advanced North Atlantic economies, a fairly regular long cycle with a periodicity of 7–10 years is identified in all countries. This component explains a substantial fraction of overall variation in industrial production. There is some evidence of a less regular, less powerful short cycle of 3–5 years duration. In peripheral economies experience is varied, but it is more often the short cycle that exercises greater influence. The long cycle component is shown to be highly correlated among the core economies, much less so between core and peripheral economies, and least of all among peripheral economies. The long cycle is more highly correlated among countries with important trading ties and those on a metallic monetary standard throughout the period.

Long-run recursive identification schemes are very popular in the structural VAR literature. This note suggests a two-step procedure based on QR decompositions as a solution algorithm for this type of identification problem. Our procedure will always deliver the exact solution and it is much easier to implement than a Newton-type iteration algorithm. It may therefore be very useful whenever quick and precise solutions of a long-run recursive scheme are required, e.g. in bootstrapping confidence intervals for impulse responses.

We analyze a model of oligopolistic competition with ongoing investment. Special cases include incremental investment, patent races, learning by doing, and network externalities. We investigate circumstances under which a firm with low costs or high quality will extend its initial lead through investments. To this end, we derive a new comparative statics result for general games with strategic substitutes, which applies to our investment game. Finally, we highlight plausible countervailing effects that arise when investments of leaders are less effective than those of laggards, or in dynamic games when firms are sufficiently patient.

It has recently been claimed that, contrary to traditional neoclassical theory, suitably chosen environmental regulation is often beneficial for the regulated firms because it induces cost-reducing innovations. I analyze the extent to which this position is compatible with microeconomic analysis. It turns out that even in a framework in which organizational inefficiencies might lead to underinvestment, environmental policy can only increase firm profits if several very specific conditions are met. These conditions concern the type of policy, the extent of inefficiencies, the costs of potential innovation projects and their effect on productivity and abatement costs.

This paper presents a model with flexible wages in which unemployment of low-skilled labor is possible in equilibrium, whereas high-skilled workers are fully employed. Thus, the model can explain why even in countries with flexible labor markets and full employment of skilled labor an employment problem exists at the bottom of the skill spectrum. The model is used to evaluate the impact of technological change and increased skill supply on the employment of low-skilled workers. It is shown that a switch to technologies with higher skill requirements unambiguously leads to a rise in unemployment of low-skilled workers. An increase in the supply of high-skilled labor has a positive effect on the employment level of low-skilled labor.

The purpose of this paper is to explore the role of changes in the sectoral structure of world demand for the welfare implications of trade and international specialization. A two-countries two-goods model with external economies of scale is presented. Demand develops according to non-linear Engel-curves with phases of expansion and saturation. The economies of scale are exploited by international labor division where the two countries specialize on different sectors. A country which specializes on the production of the income-inelastic good may suffer losses from international labor division and trade.

With the help of a standard 2 × 2 trade model, we develop several hypotheses on the effects of cross-border sourcing on skill intensity in production. The focus is on cross-border sourcing of low-skill-intensive components of exports and import-competing products. We test the aforementioned hypotheses with panel data for manufacturing in the European Union (EU). We find that outward processing is more prevalent in import-competing industries, which are also the EU’s relatively intensive users of low-skilled labor. Outward processing in export industries is found to reduce the skill-to-low-skill ratio in EU industries, while outward processing in import-competing industries has more ambiguous effects.

Most professional economists believe that economist in general are more selfish than other persons and that this greater selfishness is due to economic education. In this paper we offer empirical evidence against this widely held belief. Using a unique data set about giving behaviour to two social funds at the University of Zurich, it is shown that economic training does not make people act more selfish. However, the 'natural experiment' supports the hypothesis that the different behaviour of economist can be explained by a selection effect.

This paper surveys recent advances in the application of random dynamical systems theory in economics. It illustrates the usefulness of this framework for modeling and analysis of economic phenomena with stochastic components, mainly focusing on stochastic dynamic models in economic growth. The paper also highlights some directions for further applications and interdisciplinary research on random dynamical systems.

This paper examines the effects of deficits spending on the Nazi recovery. Although deficits were substantial and full employment was reached within four years, their fiscal impulse was too small to account for the speed of recovery. VAR forecasts of output using fiscal and monetary policy instruments also suggest only a minor role for active policy. Nazi policies deliberately crowded out private demand to ensure high rates of rearmament. Military spending dominated civilian work-creation already in 1934. Investment in autobahn construction was minimal during the recovery and gained momentum only in 1936 when full employment was approaching. We find some effects of the Four Years Plan of late 1936, which boosted government spending further and tightened public control over the economy.