We show that tests for a break in the persistence of a time series in the classical I(0) - I(1) framework have serious size distortions when the actual data generating process exhibits long-range dependencies. We prove that the limiting distribution of a CUSUM of squares based test depends on...

This article investigates economic performance when enforceable property rights are missing and subsistence needs matter. It shows that if per capita income is sufficiently high, a windfall gain in productivity triggers behavior that leads to higher growth (the normal reaction). The same shock...

This paper proposes a model that links households and firms, as usual, by markets for factors and goods and, additionally, by a banking sector that channels households' funds to firms and eliminates idiosyncratic risk. In equilibrium, agency costs and tax benefits of corporate debt are...

The recent focus on 'pro-poor growth' led also to an intense debate on how exactly to define and to measure pro-poor growth. However, all suggested measures, irrespective whether they use the absolute or the relative definition of pro-poor growth have in common that they are based on the...

This paper analyzes conditions for existence of a strongly rational expectations equilibrium (SREE) in models with private information, where the amount of private information is endogenously determined. It is shown that the conditions for existence of a SREE known from models with exogenously...

The economic analysis of technology policy suggests non-distortive public support of private innovative activities with a stress upon basic rather than applied research. Actual technology policy in Germany is marked by a high degree of sectoral selectivity which results from the dominance of...

We propose and test a positive model of fiscal federalism in which centralization is less likely to occur in jurisdictions with referendum decisions on policy centralization. Citizens choose centralization of public spending and revenue in order to internalize spillovers if individual...

Die Globalisierung der Märkte und des Wettbewerbs sowie die damit einhergehenden Herausforderungen für die nationalstaatliche Wirtschaftspolitik werden seit einer Reihe von Jahren in der Wissenschaft wie in Politik und Gesellschaft intensiv diskutiert. Als Triebkräfte des ökonomischen...