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You are here: Home Issues Volume VI(2) - December 2017

Volume VI(2) - December 2017

In this issue, results of Bachelor and Master theses are presented by C. Lancier, T. Schildmann, A. Seidlitz and L. Stoppok.

Volume VI(2) - December 2017

How to obtain the issue? A free digital copy of The Bonn Journal of Economics 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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The Impact of Demographic Change on Inflation Dynamics: An Empirical Analysis

Christopher Lancier. In recent years inflation has been damping around the zero line and the issue of demographic change towards ever increasing life expectancy and diminishing fertility rates is receiving an increasing degree of public and scientific attention. This work tries to contribute to the rather scarce existing research on the connection between demography and inflation by characterizing and comparing the impact different age cohorts exert on inflation dynamics, each for a sample of advanced and developing countries. The analysis is conducted via a fixed effects regression model with a focus on robustness across different time periods and control variables. In fact, the results indicate substantial differences in virtue between advanced and developing countries regarding the impact of demographic change on inflation dynamics.

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Automatic Stabilization in a Small Open Economy - (How) does the Exchange Rate Regime matter?

Teresa Schildmann. In this article I address the question whether a country in a currency union can, ceteris paribus, expect more business cycle stabilization from systematic fiscal policy than a country outside, given monetary policy seems to be less responsive. To this end, I build on the heterogeneous agent DSGE model of McKay (2016) and modify the monetary policy rule such that it approximates long-run price dynamics of a country facing a currency peg. The subsequent experiments of reducing the scope of automatic fiscal stabilizers however show that fixed exchange rates are in general not more supportive to fiscal stabilization policies.

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An Early And Lasting Advantage? – Long Term Effects Of The School Starting Age

Arnim Seidlitz. This paper investigates long term effects of the school starting age. It is based on the Swiss TREE-panel which consists out of PISA data for about 6000 students and a follow-up survey in nine waves. The outcome variables are PISA test scores, the decisions to continue schooling until the university entrance diploma and to attend a college and the events of obtaining the university entrance diploma and a college degree. I estimate a general effect of the school starting age for a subgroup of my sample using a fixed-effects regression and an isolated effect of the age position compared to the peers with an IV-regression. The estimations for PISA test scores, the decision to continue schooling and finally obtaining the university entrance diploma show a negative effect of being older at school entrance. These outcomes are at odds with the previous literature and may result from a sample selection issue. However, the estimations for the effect of being older compared to the peers at school does not face this problem. I find a significant negative effect of a higher age position on the likelihood to continue schooling but no effect on the likelihood to graduate with a university entrance diploma.

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Statistically Significant Overlaps in the German Equity Fund Sector: A Network Analysis

Lucie Stoppok. How do German equity fund networks perform when markets struggle? The German mutual fund sector and in particular equity funds have received increased attention over the last couple of years because of their growth in size and high level of interconnectedness. However, data limitations have prevented researchers from being able to perform in depth analyses of the sector. With the Deutsche Bundesbank’s micro level dataset on German equity funds, I shed light on how fund returns are affected by volatile markets depending on the funds network affiliation. My identification strategy follows a statistical null random network model that allows one to identify statistically important fund networks. Based on these groupings, I run panel regressions on the funds return performance. My results show that German equity funds that are statistically proven to be highly similar in terms of their sector investments suffer negative returns during crisis periods, while their non-significant counterparts experience low but positive returns.

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