During the European sovereign debt crisis, most countries that ran into fiscal trouble had Catholic majorities, whereas countries with Protestant majorities were able to avoid fiscal problems. Survey data show that, within Germany, views on the euro crisis differ between Protestants and...

This paper examines the effects of fiscal policy measures on GDP and the government budget balance in a structural VAR model. In order to identify expenditure shocks we follow Blachard/Perotti (2002) and assume that government expenditure is partly predetermined in the budget. For the...

Economic institutions determine prospects for growth and development. In this paper a condition on the primitives determines whether an economy supports institutions that implement markets. Agents differ in land holdings, skill, and power. A competitive market assigns land to the skilled, not...

This paper proposes a new approach to evaluate the macroeconomic effects of the Hartz IV reform in Germany, which reduced the generosity of long-term unemployment benefits. We use a model with different unemployment durations, where the reform initiates both a partial effect and an equilibrium...

Research on the measurement of uncertainty has a long tradition. Recently, the creation of the economic policy uncertainty index sparked a new wave of research on this topic. The index is based on major American newspapers with the use of manual labeling and counting of specific keywords....

The expanding/contracting behavior of monetary macroeconomic models is largely driven by government deficits. Their monetary effects on inflation and monetary growth determine the real value of money (or of government debt) in the long run. Only positive stationary (constant) real values of...

This paper shows that the matching function and the Beveridge curve in the United States exhibit strong nonlinearities over the business cycle. These patterns can be replicated by enhancing a search and matching model with idiosyncratic productivity shocks for new contacts. Large negative...

We study the revision of macroeconomic expectations due to aggregate demand, aggregate supply and monetary policy shocks. Using zero and sign restrictions, the macroeconomic shocks are identified in a vector autoregressive model in which we include survey data that measure macroeconomic...

In many industries, the number of firms evolves non-monotonically over time. A phase of rapid entry is followed by an industry shakeout: a large number of firms exit within a short period. We present a simple timing game of entry and exit with an exogenous technological process governing firm...

This paper provides first firm-level evidence on the links between income inequality within a country and the patterns of trade and export prices. We identify a theoretical mechanism behind these links, which relates income inequality to product quality and prices using a simple demand...