- Credit card debt puzzles (2005)
- Most US credit card holders revolve high-interest debt, often combined with substantial (i) asset accumulation by retirement, and (ii) low-rate liquid assets. Hyperbolic discounting can resolve only the former puzzle (Laibson et al., 2003). Bertaut and Haliassos (2002) proposed an 'accountant-shopper' framework for the latter. The current paper builds, solves, and simulates a fully-specified accountant-shopper model, to show that this framework can actually generate both types of co-existence, as well as target credit card utilization rates consistent with Gross and Souleles (2002). The benchmark model is compared to setups without self-control problems, with alternative mechanisms, and with impatient but fully rational shoppers. Klassifikation: E210, G110
- Incompatible european partners? Cultural predispositions and household financial behavior (2014)
- The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants to Sweden. Classification based on genetic distance or on Hofstede’s cultural dimensions fails to identify a single ‘southern’ culture but points to a ‘northern’ culture. Significant differences in financial behavior are found across cultural groups, controlling for household characteristics. Financial behavior tends to converge with longer exposure to common institutions, but is slowed down by longer exposure to original institutions.
- Salary cuts and competitiveness (2013)
- There is a prevalent view outside Greece that promotion of competitiveness is tantamount with price reductions for Greek goods and services. Massive horizontal salary cuts appear, at first, to promote competitiveness by reducing unit labor costs and to reduce fiscal deficits by reducing the wage bill of the public sector. Upon closer look, however, horizontal salary cuts have been much greater than needed for Greek competitiveness, providing an alibi vis a vis the Troika for reforms that are still to be implemented, but at the same time undermining both competitiveness and the potential to reduce public debt through sustainable development.
- The fiscal crisis as a crisis in trust (2014)
- Neither Northerners are willing to invest in a South they perceive as unwilling to undertake necessary structural reforms, nor are Southerners willing to invest in their countries in a climate of austerity and policy uncertainty imposed, in their view, by the North. This results in a vicious cycle of mistrust. However, as the author argues, big steps in the direction of reforms may provide just enough thrust to break out of this vicious cycle, propel southern countries – and especially Greece – to a much happier future, and promote the chances for more balanced economic performance in North and South.
- Verschwenderische Südeuropäer? (2011)
- Entgegen der allgemeinen Wahrnehmung arbeiten die Menschen in den südeuropäischen Ländern viel. Ihre durchschnittliche Arbeitsproduktivität liegt jedoch weit unter dem EU-Durchschnitt. Strukturelle Reformen zur Steigerung der Arbeitsproduktivität sollten die höchste Priorität haben.
- Prodigal Italy Greece Spain? (2011)
- Contrary to widely held perceptions, workers in the southern European states that are most afflicted by the sovereign debt crisis work hard. However, labor productivity in these countries lags far behind the EU average. Structural reforms to boost productivity should be at the top of the reform agenda.
- Löhne kürzen schadet der Wettbewerbsfähigkeit (2013)
- Außerhalb Griechenlands herrscht die Ansicht vor, dass eine höhere Wettbewerbsfähigkeit gleichbedeutend ist mit Preissenkungen für Güter und Dienstleistungen. Angesichts der begrenzten Bereitschaft in Griechenland, Reformen umzusetzen, fordern die Gläubiger drastische Lohnkürzungen, um die Produktivität zu erhöhen und die öffentlichen Ausgaben zu senken. Doch mit einer Kürzungsrunde nach der anderen lässt sich Wettbewerbsfähigkeit nicht erreichen. Umfangreiche flächendeckende Lohnkürzungen reduzieren vielmehr die erwartete Produktivität, da sie die besten Arbeitnehmer vertreiben, dem Rest Anreize zur Produktivität nehmen und neue gute Leute fernhalten.
- Financial advisors: a case of babysitters? (2009)
- We merge administrative information from a large German discount brokerage firm with regional data to examine if financial advisors improve portfolio performance. Our data track accounts of 32,751 randomly selected individual customers over 66 months and allow direct comparison of performance across self-managed accounts and accounts run by, or in consultation with, independent financial advisors. In contrast to the picture painted by simple descriptive statistics, econometric analysis that corrects for the endogeneity of the choice of having a financial advisor suggests that advisors are associated with lower total and excess account returns, higher portfolio risk and probabilities of losses, and higher trading frequency and portfolio turnover relative to what account owners of given characteristics tend to achieve on their own. Regression analysis of who uses an IFA suggests that IFAs are matched with richer, older investors rather than with poorer, younger ones.
- Household debt and social interactions (2013)
- Debt-induced crises, including the subprime, are usually attributed exclusively to supply-side factors. We uncover an additional factor contributing to debt culture, namely social influences emanating from the perceived average income of peers. Using unique information from a representative household survey of the Dutch population that circumvents the need to define the social circle, we consider collateralized, consumer, and informal loans. We find robust social effects on borrowing – especially among those who consider themselves poorer than their peers – and on indebtedness, suggesting a link to financial distress. We check the robustness of our results using several approaches to rule out spurious associations and handle correlated effects.