0000000000161331
AUTHOR
Klaus Wälde
Applied Intertemporal Optimization
This textbook provides all tools required to easily solve intertemporal optimization problems in economics, finance, business administration and related disciplines. The focus of this textbook is on 'learning through examples' and gives a very quick access to all methods required by an undergraduate student, a PhD student and an experienced researcher who wants to explore new fields or confirm existing knowledge. Given that discrete and continuous time problems are given equal attention, insights gained in one area can be used for learning solutions methods more quickly in other contexts. This step-by-step approach is especially useful for the transition from deterministic to stochastic wor…
Covid-19 in Deutschland – Erklärung, Prognose und Einfluss gesundheitspolitischer Maßnahmen
Zusammenfassung Die Autoren erklären den bisherigen Verlauf von Covid-19 in Deutschland durch Regressionsanalysen und epidemiologische Modelle. Sie beschreiben und quantifizieren den Effekt der gesundheitspolitischen Maßnahmen (GPM), die bis zum 19. April in Kraft waren. Sie berechnen den erwarteten Verlauf der Covid-19-Epidemie in Deutschland, wenn es diese Maßnahmen nicht gegeben hätte, und zeigen, dass die GPM einen erheblichen Beitrag zur Reduktion der Infektionszahlen geleistet haben. Die seit 20. April gelockerten GPM sind zwischen den Bundesländern relativ heterogen, was ein Glücksfall für die Wissenschaft ist. Mittels einer Analyse dieser Heterogenität kann aufgedeckt werden, welche…
The Invariant Distribution of Wealth and Employment Status in a Small Open Economy with Precautionary Savings
Abstract We study optimal savings in continuous time with exogenous transitions between employment and unemployment as the only source of uncertainty in a small open economy. We prove the existence of an optimal consumption path. We exploit that the dynamics of consumption and wealth between jumps can be expressed as a Fuchsian system. We derive conditions under which an invariant joint distribution for the state variables , i.e., wealth and labour market status, exists and is unique. We also provide conditions under which the distribution of these variables converges to the invariant distribution. Our analysis relies on the notion of T-processes and applies results on the stability of Mark…
How Bad is Globalization for Labour Standards in the North?
We analyse a world consisting of "the North" and "the South" where labour standards in the North are set by trade unions. Standards set by unions tend to increase output and welfare. There are no unions in the South and work standards are suboptimal. Trade between these two countries can imply a reduction in work standards in the North. Moreover, when trade unions are established in the South, the North, including northern unions, tend to lose. Quantitatively, these effects are small and overcompensated by gains in the South. The existing empirical literature tends to support our findings.
The Covid-19 containment effects of public health measures - A spatial difference-in-differences approach
AbstractSince mid-March 2020 the Federal and state governments in Germany agreed on comprehensive public health measures to curb the spread of SARS-CoV-2 infections leading to the Covid-19 disease. We study the containment effects of these policy interventions on the progression of the pandemic in the first containment phase in spring 2020 before the easing of restrictions may become effective by the end of April. To exploit both the temporal and spatial dimension in the dissemination of the virus, we conduct a spatial panel data analysis for German NUTS-3 regions. Specifically, we employ a spatial difference-in-differences approach to identify the effects of six compound sets of public hea…
Face masks considerably reduce COVID-19 cases in Germany
Significance Mitigating the spread of COVID-19 is the objective of most governments. It is of utmost importance to understand how effective various public health measures are. We study the effectiveness of face masks. We employ public regional data about reported severe acute respiratory syndrome coronavirus 2 infections for Germany. As face masks became mandatory at different points in time across German regions, we can compare the rise in infections in regions with masks and regions without masks. Weighing various estimates, we conclude that 20 d after becoming mandatory face masks have reduced the number of new infections by around 45%. As economic costs are close to zero compared to oth…
Should Contact Bans Have Been Lifted More in Germany?
Abstract Many countries consider the lifting of restrictions of social contacts (RSC). We quantify the effects of RSC for Germany. We initially employ a purely statistical approach to predicting prevalence of Covid-19 if RSC had been upheld after 20 April. We employ these findings and feed them into our theoretical model. We find that the peak of the number of sick individuals would have been reached already end of April. The number of sick individuals would have fallen below 1000 at the beginning of July. If restrictions had been lifted completely on April 20, the number of sick should have risen quickly again from around 27 April. A balance between economic and individual costs of RSC and…
On the Estimation of the Volatility-Growth Link
It is common practice to estimate the volatility-growth link by specifying a standard growth equation such that the variance of the error term appears as an explanatory variable in this growth equation. The variance in turn is modeled by a second equation. Hardly any of existing applications of this framework includes exogenous controls in this second variance equation. Our theoretical findings suggest that the absence of relevant explanatory variables in the variance equation leads to a biased and inconsistent estimate of the volatility-growth link. Our simulations show that this effect is large. Once the appropriate controls are included in the variance equation consistency is restored. I…
The Employment Effect of Reforming a Public Employment Agency
By how much does an increase in operating effectiveness of a public employment agency (PEA) and a reduction of unemployment benefits reduce unemployment? Using a recent labour market reform in Germany as background, we find that an enhanced effectiveness of the PEA explains about 20% of the observed post-reform unemployment decline. The role of unemployment benefit reduction explains just about 5% of the observed decline. Due to disincentive effects resulting from the reform, the reform of the PEA could have had an even higher impact on unemployment reduction if there had been less focus on long-term unemployed workers.
Production technologies in stochastic continuous time models
Abstract Properties of dynamic stochastic general equilibrium models can be revealed by either using numerical solutions or qualitative analysis. Very precise and intuition-building results are obtained by working with models which provide closed-form solutions. Closed-form solutions are known for a large class of models some of which, however, have some undesirable features such as potentially negative output. This paper offers closed-form solutions for models which are just as tractable but do not suffer from these shortcomings.
ESTIMATING INCENTIVE AND WELFARE EFFECTS OF NONSTATIONARY UNEMPLOYMENT BENEFITS
The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays time-varying exit rates. Building on semi-Markov processes, we translate these rates into an expression for the aggregate unemployment rate. Structural estimation using German microdata allows us to discuss the effects of an unemployment benefit reform (Hartz IV). The reform reduced unemployment by less than 0.1 percentage points. Contrary to general beliefs, the net wage for most skill and regional groups increased. Taking the insurance effect of unemployment benefits into account, however, the reform is welfare reducing for 76% of workers.
The Covid-19 containment effects of public health measures:A spatial difference-in-differences approach
Abstract The paper studies the containment effects of public health measures to curb the spread of Covid‐19 during the first wave of the pandemic in spring 2020 in Germany. To identify the effects of six compound sets of public health measures, we employ a spatial difference‐in‐differences approach. We find that contact restrictions, mandatory wearing of face masks and closure of schools substantially contributed to flattening the infection curve. The significance of the impact of restaurant closure does not prove to be robust. No incremental effect is evidenced for closure of establishments and the shutdown of nonessential retail stores.
Should contact bans be lifted in Germany? A quantitative prediction of its effects
Many countries consider the lifting of restrictions of social contacts (RSC). We quantify the effects of RSC for Germany. We initially employ a purely statistical approach to predicting prevalence of COVID19 if RSC were upheld after April 20. We employ these findings and feed them into our theoretical model. We find that the peak of the number of sick individuals would be reached already mid April. The number of sick individuals would fall below 1,000 at the beginning of July. When restrictions are lifted completely on April 20, the number of sick should rise quickly again from around April 27. A balance between economic and individual costs of RSC and public health objectives consists in l…
Is large-scale rapid CoV-2 testing a substitute for lockdowns?
Background Various forms of contact restrictions have been adopted in response to the Covid-19 pandemic. Around February 2021, rapid testing appeared as a new policy instrument. Some claim it may serve as a substitute for contact restrictions. We study the strength of this argument by evaluating the effects of a unique policy experiment: In March and April 2021, the city of Tübingen set up a testing scheme while relaxing contact restrictions. Methods We compare case rates in Tübingen county to an appropriately identified control unit. We employ the synthetic control method. We base interpretations of our findings on an extended SEIR model. Findings The experiment led to an increase in the …
How Trade Unions Increase Welfare
Historically, worker movements have played a crucial role in making workplaces safer. Firms traditionally oppose better health standards. According to our interpretation, workplace safety is costly for firms but increases the average health of workers and thereby the aggregate labour supply. A laissez faire approach in which firms set safety standards is suboptimal as workers are not fully informed of health risks associated with jobs. Safety standards set by better informed trade unions are output and welfare increasing.
On the Link Between Volatility and Growth
A model of growth with endogenous innovation and distortionary taxes is presented. Since innovation is the only source of volatility, any variable that influences innovation directly affects volatility and growth. This joint endogeneity is illustrated by working out the effects through which economies with different tax levels differ in their volatility and growth process. We obtain analytical measures of macro volatility based on cyclical output and on output growth rates for plausible parametric restrictions. This analysis implies that controls for taxes should be included in the standard growth-volatility regressions. Our estimates show that the conventional Ramey-Ramey coefficient is af…
Projecting the spread of COVID-19 for Germany
We model the evolution of the number of individuals that are reported to be sick with COVID-19 in Germany. Our theoretical framework builds on a continuous time Markov chain with four states: healthy without infection, sick, healthy after recovery or after infection but without symptoms and dead. Our quantitative solution matches the number of sick individuals up to the most recent observation and ends with a share of sick individuals following from infection rates and sickness probabilities. We employ this framework to study inter alia the expected peak of the number of sick individuals in a scenario without public regulation of social contacts. We also study the effects of public regulati…