Volume 23, Issue 4

Favorable macroeconomic conditions, accompanied by optimistic consumer confidence, can stimulate and shape households’ expectations in such a way that they gradually extrapolate the view of good times lasting “forever”. As a consequence, households can then be inclined to accept a much higher level of indebtedness – higher than they would be willing to take on if they were to correctly perceive a discontinuation of the positive trend in the future. This paper documents the empirical link between the macroeconomic conditions faced by households, the confidence of households as investors and consumers, and households’ demand for credit on a sample of 21 European countries. The well-known procyclicality of household credit is found to grow stronger when favorable macroeconomic conditions are met with optimistic consumer confidence. While household credit goes hand in hand with the improving economy during an economic upturn, it is found to be sticky on the way down. Estimates show that households tend to extrapolate recent and current macroeconomic trends to the future and over-estimate the persistence of favorable or adverse conditions.

In this paper, we analyze the role of economic complexity as a driver of regional labor productivity growth in Italy. The Economic Complexity Index ( ECI ) measures the multiplicity of knowledge embedded in an economy’s productive structure and can be interpreted as an indicator of “qualified diversity”. We assess the impact of ECI on the distribution dynamics of labor productivity by combining growth regression analysis with conditional density estimates. Counterfactual analysis results suggest that ECI plays a key role in the observed tendency to polarization of regional labor productivity. We also provide evidence of a long-run relationship between labor productivity and ECI by using a panel cointegration analysis.

The COVID-19 pandemic has decelerated substantial parts of economic and human interaction. This paper estimates football matches’ contribution to the spread of COVID-19 during Germany’s second infection wave in summer and autumn 2020. Exploiting the exogenous fixture schedules of matches across German counties in an event study design, we estimate that one additional match in a county on average raises daily cases by between 0.34 to 0.71 cases per 100,000 inhabitants after three weeks. Hence, this implies an increase of the seven-day incidence per 100,000 inhabitants by around three to seven percent. We do not find qualitatively different results for a subsample of German top league matches with the strictest hygiene regulations or matches with higher occupancy levels. Notably, the found effect is mediated by the incidence level at the day of the match with very few infections for matches at a seven-day incidence below 25. Using mobile phone data, we identify strong increases in the local mobility as an underlying mechanism. We finally show that the ban of away fans successfully limited the spread of COVID-19 beyond county borders. Our results alert that even outdoor mass gatherings can remarkably cause infections.

The COVID-19 pandemic and related closures of day care centres and schools significantly increased the amount of care work done by parents. There has been much speculation over whether the pandemic increased or decreased gender equality in parental care work. Based on representative data for Germany from spring 2020 and winter 2021 we present an empirical analysis that shows that although gender inequality in the division of care work increased to some extent in the beginning of the pandemic, it returned to the pre-pandemic level in the second lockdown almost nine months later. These results suggest that the COVID-19 pandemic neither aggravated nor lessened inequality in the division of unpaid care work among mothers and fathers in any persistent way in Germany.

In a federal country with two regions, consumers can decide not only the region where to invest, but also the type of capital investment. We analyse how such decision is affected by the fact that a first type of capital is taxed at a regional level while a second one is taxed at a federal level with tax compliance for federal taxation varying across regions. A standard horizontal tax competition arises for the first type of capital across regions. Instead, vertical tax competition arising between the regional and the federal level is not standard because there is not tax base overlap between the two tiers of government. However, both regional and federal tax bases are affected by tax policies decided by each level of government via capital movements from one type of capital towards the other one. Our main result shows under which conditions an increase in federal taxation in response to an increase in tax noncompliance may be less severe than in a set-up with only one type of capital because of capital flights arising not only across regions, but also across different types of capital investment.