10 June 2020. Please note that I have not uploaded the referenced paper and/or have not linked them where indicated in a number of cases. I will do so in due time.

Research agenda

A major focus of my research is on analyzing price-setting behavior and price dynamics with respect to several dimensions. These include:

- various aspects of international price setting
- pass-through of cost changes to prices
- provision of improved and/or extended measures of inflation by using micro price data
- evaluation of the implications of observed price-setting patterns on the transmission of monetary policy decisions

At the core of this research is a huge, global and unique scanner price data set which is collected by international marketing companies and which is made available for research purposes via AiMark and its initiative "MIGGROPRICES".

My second major research area is to explore the interactions between local banking/financial markets and regional economic developments with a focus on the economic dynamics of SMEs. Again, this research work is empirically oriented and is primarily based on micro data comprising detailed and partly unique information on banks and firms. Questions to be addressed include the relevance of access to external finance for regional economic growth, firms exports or their innovation behavor.


Working papers and work in progress

Prices and global inequality: new evidence from worldwide scanner data (with  Xavier Jaravel)

How do prices a ect inequality and living standards worldwide? To address existing biases in the measurement of prices and expenditure patterns across countries, this paper introduces a new  global scanner database. This dataset provides harmonized barcode-level data on expenditures and prices for fast-moving consumer goods during the last decade in thirty four countries, which include both developing (e.g., Brazil, China, India, and South Africa) and developed countries (e.g., the United States, Russia, and most European countries) and represent 70% of world GDP and 60% of world population. In the first part of the analysis, we focus on inflation  within countries over time and establish three main results. (1.a) We quantify the extent of  substitution bias and entry-exit bias in all countries, and find that the entry-exit bias leads to a large upward bias in standard inflation measures in almost all countries. When correcting for this bias, we find that most countries have experienced deflation in the past decade. (1.b) We  compute household-speci c price indices and find that in ation inequality has been a worldwide phenomenon in the past ten years. In most countries, inflation has been lower and product variety has increased faster in product categories catering to higher-income households. (1.c) We document changes in global market power over time, measuring global market concentration and estimating markups structurally. We find that global market power has remained stable over the past decade and did not constitute a signi cant source of inflation or inequality. In the second part of the paper, we build purchasing power parity (PPP) indices using identical barcodes across countries. We highlight three main findings. (2.a) We find that accounting for differences in product variety across countries, which standard PPP indices cannot do, is essential to accurately characterize cross-country di erences in purchasing power. For example, Italy has a lower cost of living than Germany with standard indices without the adjustment for product variety, but a higher cost of living with the adjustment. (2.b) We also nd that PPP indices between countries vary signi cantly depending on which household income serves as the reference level. For example, Italy is signi cantly more expensive than Germany for a household in the middle class, while for a high-income household the cost of living is very similar. We develop a new approach to non-homothetic PPP indices to characterize di erences in purchasing power along the entire household income distribution in all countries. (2.c.) We compute price indices which allow for taste di erences across countries, which standard PPP indices cannot do, and nd that taste di erences signi cantly a ect PPP indices worldwide. In the nal part of the paper, we assess the external validity of our ndings beyond fast-moving consumer goods. We rst take a structural approach, using shifts in relative Engel curves to infer changes in overall welfare from our data. We then check the external validity of some of our ndings directly by using data on prices and expenditures from national statistical agencies, which cover the full consumption basket of consumers. Overall, these ndings indicate that using micro data on prices and expenditures is crucial to accurately describe patterns of inclusive growth worldwide. To facilitate subsequent work leveraging worldwide scanner data, we provide publicly available statistics on a companion website.


Pass-hhrough of local corporate taxes to consumer prices: evidence from German micro data (with Sebastian Kessing, Sebastian Siegloch and Malte Zoubek).

Tax incidence, i.e. the question who bears the burden of a particular tax, has been a classic topic in public finance, and it is intricately linked to tax pass-through- Our paper quantitiatvely evaluates whether, and to what extent, firms can shift corporate taxes to prices. Conceptually, this requires a setting of imperfect competition. This is empirically plausible, but has been somewhat neglected in most of the modern literature on corporate tax incidence building on Harberger’s (1962) seminal analysis. Recent studies have shown empirically that workers bear a substantial share of the burden of corporate taxes (approximately 30-50%, see Fuest et al. (2018), and Suarez Serrato and Zidar (2016)). This raises the question, whether the remaining burden will be borne by capital, or whether this burden may be shifted upstream to suppliers or downstream to customers and final consumers. The project focuses on the latter channel, i.e. the pass-through rate of corporate taxes to prices, for which no convincing empirical evidence exists.


Local banking markets and regional economic development (with Guido Schwerdt)

Recent evidence overwhelmingly suggests that the financial development of a market positively influences its economic dynamics. This is in contradiction to a view prominently expressed by Robert E. Lucas according to which the role of financial markets on economic growth is badly over-stressed. Employing a unique set of data on regional financial and economic development in East and West Germany we find contradictory evidence on this hypothesis. Whilst a strong positive link exists for West German regions, our findings for East Germany appear to confirm Lucas’ claim. In deriving our results, we control for potential endogeneity problems by employing the structure of the heavily regulated East German banking system immediately before the


Does local banking market development matter for R&D? Evidence from German SMEs (with Assem Khussainova)

R&D activities are widely perceived as presenting an essential factor promoting not  only firm-level but also aggregate productivity and economic growth. When external funds are required to realize an intended R&D investment firms often face challenges to attract these means. This is due to several features inherent to R&D projects and in particular affects small and medium-sized firms (SMEs) which tend to rely strongly on bank lending as an external source of funds. Whereas in line with theoretical considerations, available empirical results suggests that the development of a banking market in general positively influences the dynamics of SMEs, evidence of such an impact with respect to firms’ innovation behavior is not only scarce but also mixed. Employing historical characteristics of the East German banking system and a comprehensive unique data set of East German manufacturing and service sector firms we are able to identify a causal effect of local banking market development on R&D: Our results provide a mixed picture.


Local banking market development and firm exports (with Stephanie Mansion)

Employing a unique set of German SME and local banking market data our analysis provides a quantitative assessment of the questions to which extent the local financing conditions of an SME are related to successful export behavior. Due to their nature, investments in export activities face financing challenges with respect to external funds. This is in particular true for small and medium-sized enterprises (SMEs). In line with theoretical considerations available empirical evidence suggests that the financial development of a market positively influences the export success of firms, particularly SMEs. However, the existing empirical evidence is fairly scarce, given that an identification of a causal effect of local banking market development on export behavior needs to properly deal with potential endogeneity problems. Employing historical characteristics of the German banking system and a comprehensive unique data set of manufacturing firms we examine to which extent the development of local banking markets affect the export activities of German firms. We find evidence of a statistically and economically causal relationship between local financing conditions and export success.

Selected (relevant) publications in refereed journals

Price gaps at the border: evidence from multi-country household scanner data (with Hans-Helmut Kotz and Natalia Zabelina), forthcoming in the Journal of International Economics. 2020. Online version | Working paper version | Replication folder.

Price elasticities and demand-side real rigidities in micro data and in macro models, (with Sarah M. Lein), Journal of Monetary Economics, forthcoming. 2019. Online version: https://doi.org/10.1016/j.jmoneco.2019.06.003.

On the importance of sectoral and regional shocks for price-setting, (with Kirstin Hubrich and Massimiliano Marcellino), Journal of Applied Econometrics,  Vol. 31(7), pages 1234-1253, 2015. Online version:http://dx.doi.org/10.1002/jae.2490.

Regional inflation dynamics within and across euro area countries and a comparison with the US (with Kirstin Hubrich and Massimiliano Marcellino), Economic Policy, Vol. 57, pages 141-184, 2009.

Central bank misperceptions and the role of money in interest rate rules (with Volker Wieland), Journal of Monetary Economics, Vol. 55, pages 1-17, 2008.

Money in monetary policy design: A formal characterization of ECB-style cross-checking (with Volker Wieland). Journal of the European Economic Association, Vol. 5(2-3), pages 524-533, 2007.

Learning and control in a changing economic environment (with Volker Wieland). Journal of Economic Dynamics and Control, Vol. 26 (9-10), pages 1359-1377, August 2002.


Publications in monographs

Money in monetary policy design: Monetary cross-checking in the New-Keynesian model (with Volker Wieland). Published in: V. Wieland (Ed.), The Sience and Practice of Monetary Policy Today, Springer Science, 2010. | Download: PDF Version


Recent policy-related publications

”Les activites de shadow banking dans un contexte de bas taux d’interet: une perspective de flux financiers’ (Euro area shadow banking activities in a low- interest-rate environment: a flow-of-funds perspective) (with Hans-Helmut Kotz). Revue d’Economie Financiere, pages 235-256, 2016.

”Lost in translation? ECB’s monetary impulses and financial intermediaries’ responses (with Hans-Helmut Kotz and Natalia Zabelina) . SAFE White Paper No. 37, 2016.

“Euro area macro-financial stability: A flow-of-funds perspective” (with Hans- Helmut Kotz and Natalia Zabelina). SAFE White Paper No. 29, 2015.


Older contributions (that still have some relevance)

Inflation dispersion and convergence in monetary and economic unions: Lessons for the ECB (with Axel A. Weber), ECB Working Paper Series. | Download: PDF Version

Price Stability, Inflation Convergence and Diversity in EMU: Does One Size Fit All? (with Axel A. Weber). | Download: PDF Version


Computational Economics, European Economic Review, German Economic Review, Journal of Economic Dynamics and Control, Journal of the European Eco- nomic Association, Journal of International Economics, Journal of Macroeco- nomics, Journal of Money, Credit and Banking, Journal of Monetary Economics, Scandinavian Journal of Economics