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You are here: Home Issues Volume III(2) - December 2014

Volume III(2) - December 2014

In this issue, results of bachelor, master and diploma theses are presented by C. Fischer, M. Marcus, A. Papies and K. Zimmermann. Additonally, Prof. Dr. Jürgen van Hagen discusses sources of fiscal risk, while JProf. Dr. Pia Pinger analyzes child human capital investments. The Bonn Journal of Economics: Volume III (2) Theses

Volume III(2) - December 2014

How to Obtain the Issue? A free digital copy of The Bonn Journal of Economics (1.4 MB) is accessible online. In addition, all Theses and Contributions are available separately. Please refer to the list of articles below for the corresponding links.

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Collusion in Repeated Auctions and the Role of Communication

Christian Fischer. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 7-30. This thesis analyses the effectiveness of collusion in repeated auctions . Under the assumption that side-payments are impossible Skrzypacz and Hopenhayn (2004) show for the case of tacit collusion that there exists an upper-bound on bidders' profits strictly below joint first-best. Their article proposes a chips mechanism under which the payoffs at this limit can be approximated. I develop an algorithm that solves this mechanism and offer an intuitive calibration in the context of the standard auction framework of Skrzypacz and Hopenhayn (2004). Testing the calibration with a parameter simulation I find that it closely approximates the payoff limit.

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Microfinance: A Cure for Poverty - A Macro Perspective

Maja Marcus. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 33-46. For more than thirty years microfinance has played a major part in poverty reducing policies. According to many studies, it has had a tremendous, macroeconomic impact on poverty over the years. Recently, however, there has been a shift in findings and the excitement surrounding the magic of microfinance has simmered down. Under the light of recent research, the objective of this thesis was to identify the qualitative and quantitative impact of microfinance on poverty on a macro scale as well as to determine the implicating policy strategies. It comes to the conclusion that microfinance most likely does not have a significant effect on poverty over the short and medium run, mainly as it fails to positively impact business growth. However, due to changing consumption patterns, arguments can be made for a positive long-term influence. Therefore various policy measures are suggested to increase the effectiveness of microfinance as a poverty-reducing instrument.

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M&A Auctions and Toeholds

Anna Papies. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 49-80. This thesis analyzes a form of strategic pre-auction behavior that helps a raider win the takeover auction: toeheolds. Acquiring a small number of the target firm’s shares ex ante has the positive effect of increasing the toeholders probability of winning the auction for the remaining shares. However, he is confronted with two-sided incentives that force him to soundly balance the (dis-)advantages of winning or losing, respectively, and thus acting as a buyer or seller. I present the seminal models in this field, point out their limitations and make suggestions for further research. Moreover, I show the practical relevance of toeholds along the lines of two illustrative examples.

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Fiscal Policy and Growth - Evidence from the German Economic Miracle

Kaspar Zimmermann. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 79-93.

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Contexts, Compliance and Imperfect Recall - Using Two-sample IV to Estimate Average Causal Effects of Child Human Capital Investments

JProf. Dr. Pia Pinger. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 119-128. Recently, much research has focused on determining critica l and sen- sitive periods in child development. In this context, the us e of non- experimental data can lead to biased estimates if parental i nvestments and human capital outcomes jointly depend on unobserved con founders. To deal with this problem, many studies relate so-called con textual vari- ation, in the form of events that are exogenous from the point of view of the individual, to later human capital outcomes. Yet, being a child when a contextual shock materializes does not necessarily imply individual suffering, such that the average causal effect of early-life inv estments on the individual cannot be determined from contextual info rmation alone. This paper explains how instrumental variable estim ation can be use to obtain causal estimates from contextual variation and infor- mation about individual human capital investments. It then discusses how combining information from two different samples can be us ed to compute causal effects in the presence of recall bias.

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Sources of Fiscal Risk in the Euro Area

Prof. Dr. Jürgen von Hagen. Full text. The Bonn Journal of Economics. Vol 3, No. 2 (December 2014), pp. 101-116.

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