Dirk Niepelt

The Economist discusses the North-South divide in Germany which increasingly replaces the East-West division. The Southern states (Saarland, Rhineland-Palatinate, Hesse, Baden-Württemberg, Bavaria, Thuringia, Saxony) do better along many dimensions. Germans in the southern states … go to better schools, get jobs more easily, earn more and live longer to enjoy it. Their governments have healthier finances, so they can invest more … crime rates are “strikingly” lower in the south....

More from the recent working paper by Oscar Jorda, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan Taylor (“The Rate of Return on Everything, 1870–2015“). (Previous blog post about the return on residential real estate.) Return data for 16 advanced economies over nearly 150 years … …on the income and capital gains (and thus, total returns) from equities, residential housing, government bonds, and government bills. Real returns average 7% p.a. for equity, 8% for housing,...

NZZ, August 17, 2017. HTML, PDF. The Vollgeld initiative may point to a problem but it does not propose a viable solution. Even with Vollgeld, the time consistency friction with its Too-Big-To-Fail implication would persist. A more flexible, liberal approach appears more promising. It would give the general public a choice between holding deposits and reserves. Financial institutions and central banks around the world are pushing in that direction.

On Alphaville, Matthew Klein discusses recent work by Jorda, Knoll, Kuvshinov, Schularick, and Taylor (“The Rate of Return on Everything, 1870–2015“) according to which Residential real estate, not equity, has been the best long-run investment over the course of modern history. … but they didn’t calculate the returns most homeowners actually experience. Most people borrow to buy housing and most people live in their properties without renting them out. This makes a big difference. … Net...

In the FT, Claire Jones reports about the German Federal Constitutional Court’s decision to refer a case against the European Central Bank’s PSPP program to the European Court of Justice. “In the view of the [court] significant reasons indicate that the ECB decisions governing the asset purchase programme violate the prohibition of monetary financing and exceed the monetary policy mandate of the European Central Bank.” … While Germany’s constitutional court said the OMT programme was...

In the NZZ, Simon Gemperli argues that Liechtenstein is doing better than Switzerland. Swiss tabloid Blick criticizes Liechtenstein. Previous, more positive NZZ articles about Liechtenstein: May 2014; March 2016; November 2016; April 2017.

In the FT, Mark Odell, Nick Megaw, and Stefan Wagstyl report about Air Berlin’s (ABX:GER) insolvency. This outcome will barely surprise Air Berlin passengers.

In a blog post, Douglas Campbell offers a ranking of economics journals by response times (based on non-representative data). The ranking (with # indicating the rank according to citations): #    Journal Name    Accept %    Desk Reject %    Avg. Time    Median Time    25th Percent. (Months)    75th Percent. (Months)    N = 1    Quarterly Journal of Economics    1%    62%    0.6    0    0    1    71 12    Journal of the European Economic Association    4%    56%    1.2    0.5    0    2  ...

From The Economist’s economics brief on Say’s Law: Supply gives people the ability to buy the economy’s output. But what ensures their willingness to do so? According to the logic of Say and his allies, people would not bother to produce anything unless they intended to do something with the proceeds. … Even if people chose to save not consume the proceeds, Say was sure this saving would translate faithfully into investment in new capital … But what if the sought-after thing was [money] …...