We analyze the relationship between the party affiliation of politicians at different levels of g... more We analyze the relationship between the party affiliation of politicians at different levels of government and the spatial distribution of funding for research, development and innovation projects. In particular, we are investigating whether more federal grants are being granted in Germany for projects in federal states whose government is led by the same political party as the responsible ministry at federal level. Our dataset contains detailed information on publicly funded projects in Germany in the period 2010–2019. Using a fixed-effects estimation approach, we find a link between grant allocation and party affiliation of funding for research, development and innovation projects, in particular smaller ones. For these projects, political alignment is associated with an average increase in public funding by almost 10,000 euro. Our results suggest that public funds for research, development and innovation projects could be used more efficiently than they are.
Many policies target the economic and social consequences of regional inequality. This study expe... more Many policies target the economic and social consequences of regional inequality. This study experimentally investigates factors explaining the public degree of consent to financial transfers to disadvantaged regions. The main hypothesis of this study is that most people use the deservingness-heuristic not only to judge individuals but also to judge regions. We argue that people advocate interregional transfers based on perceived deservingness determined by recipient region’s need, lack of responsibility for the need, likelihood of reciprocity, and by a shared identity. To support this hypothesis, we conducted a factorial survey in Germany asking respondents to rate transfers to needy regions under different hypothetical conditions. We demonstrate, as predicted by the deservingness hypothesis, that consent to transfers to other regions is positively influenced by the extent of need and, in particular, past effort of the recipient region as well as by a shared identity. The results s...
In this paper, we analyze the impact of policy-induced opportunity costs and restrictions on the ... more In this paper, we analyze the impact of policy-induced opportunity costs and restrictions on the outcomes of auctions to subsidize ground-mounted photovoltaic (PV) systems in Germany since 2015. First, we examine the incidence of opportunity cost reductions for some suppliers in a simple theoretical auction model. Second, we descriptively study the volumes and prices in PV auctions in Germany. Finally, we analyze a quasi-experiment: the opening of auctions for farmland in disadvantaged areas in some German states from 2017. We show that policy-induced opportunity cost reductions lead to greater success in PV auctions only in the state of Bavaria, which has more generous quantity restrictions and is generally expected to be more supportive of solar power suppliers after 2017. As a result, there is an interregional redistribution in favor of a single state that enables and administratively effectively implements support for disadvantaged areas.
This paper examines how short-term rentals are changing living conditions and the composition of ... more This paper examines how short-term rentals are changing living conditions and the composition of the population in affected parts of a town. First, to analyze the relation between quality, distance, and rents, we develop a spatial monocentric city model with varying housing quality levels. Second, for 200 m grids in the city of Berlin (Germany) in 2019, we show that the proportion of low and medium quality residential units correlates positively near the city center with the probability of Airbnb listings and the number of these listings, but negatively in the suburbs. Third, applying fixed effect and IV strategies, we investigate the impact of Airbnb listings on living conditions and the composition of the population in the almost 450 planning areas of Berlin in the years 2016–2019. We show that Airbnb offers increase the number of residents with long periods of residence and reduce the number of residents in low-quality residential environments, but we do not find above-average effects on socially weak groups.
FEN: Differences in Taxation & Corporate Finance (Topic), 2009
This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corpo... more This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corporate taxes and multinational enterprises choose tax-efficient capital-to-debt ratios. Under separate accounting, multinationals shift debt from low-tax to high-tax countries. The Nash equilibrium of the tax competition game is characterized by underprovision of publicly provided goods. Under formula apportionment, the country-specific capital-to-debt ratio of a multinational’s affiliate is independent of the jurisdiction’s tax rate. Public good provision is either too large or too small. If the debt externality is not negative, there is clearly underprovision under formula apportionment.
This paper analyzes a closed, essentially linear polycentric city with homogenous households who ... more This paper analyzes a closed, essentially linear polycentric city with homogenous households who probabilistically select their workplace and residence locations. The study utilizes a continuous logit model to describe household location choices. In contrast to the classic urban model with deterministic location choices, the continuous logit model predicts noticeable direct effects of more than one workplace on land rents, asymmetry of the land rent schedule around secondary business districts, incomplete segregation of citizens who work in different business centers and, therefore, cross commuting, and incomplete segregation of workers and farmers.
This paper proposes the question whether or not traveling expenses to work should be deductible f... more This paper proposes the question whether or not traveling expenses to work should be deductible from the income tax base. In order to answer this question, a simple model of (im-) perfect household and worker mobility is employed. The focus of the analysis is on the efficient use of land and the efficient allocation of people and labor in a multi-region framework. The paper shows that deductibility is inefficient only if households are per-fectly mobile and if households cannot choose their place of work. If the region of work is not exogenously fixed, traveling expenses to work should be deductible at more than one hundred percent, even if households choose simultaneously the place of work and the region of residence, and even if tax rates are not standardized within the federation.
We examine long-term lending in the course of the Covid-19 pandemic in Germany. We show that the ... more We examine long-term lending in the course of the Covid-19 pandemic in Germany. We show that the pandemic is associated with increased lending by credit cooperatives and savings banks. The restrictions imposed by governments on social and economic life and the economic impact thereof, measured in terms of planned short-time work, show a significant correlation with the level of lending by all banks.
In this paper, we analyze several local referendums on land development and land-use regulation i... more In this paper, we analyze several local referendums on land development and land-use regulation in the City of Erlangen (Germany) between 2011 and 2018. To identify the positive influence of the travel distance on approval for land development, we control for distance to the city center and density, employ a two-way fixed-effect model, and use spatial instruments. We also analyze the heterogeneity of city dwellers' preferences for the development of residential and commercial areas. In particular, we examine the differences between homeowners and tenants in this regard.
Zusammenfassung Höhere Mieten bzw. Immobilienpreise und/oder niedrige Löhne werden auf funktionie... more Zusammenfassung Höhere Mieten bzw. Immobilienpreise und/oder niedrige Löhne werden auf funktionierenden Märkten die höhere natürliche Standortattraktivität einer Region bzw. ein attraktiveres Angebot öffentlicher Güter ausgleichen, wenn die Menschen Wohn- und Arbeitsort frei wählen können. Wenn Lohn- und Mietenunterschiede zwischen lokalen Wohnungs- und Arbeitsmärkten durch staatliche Preisregulierung verhindert bzw. reduziert werden, dann führt das in einigen Regionen zu Nachfrage- und in anderen Regionen zu Angebotsüberschüssen. Wanderungsbewegungen, die Versorgungsengpässe verstärken können, werden ausgelöst. Auf Märkten mit Friktionen allerdings haben neben Preisen auch Mengen eine kompensatorische Funktion. Längere Suchzeiten auf lokalen Wohnungs- und Arbeitsmärkten wirken ebenfalls den Anziehungskräften attraktiver Standorte entgegen. Dieser Aufsatz stellt die grundlegenden Mechanismen dar und erläutert diese anhand stilisierter Fakten.
We analyze the relationship between the party affiliation of politicians at different levels of g... more We analyze the relationship between the party affiliation of politicians at different levels of government and the spatial distribution of funding for research, development and innovation projects. In particular, we are investigating whether more federal grants are being granted in Germany for projects in federal states whose government is led by the same political party as the responsible ministry at federal level. Our dataset contains detailed information on publicly funded projects in Germany in the period 2010–2019. Using a fixed-effects estimation approach, we find a link between grant allocation and party affiliation of funding for research, development and innovation projects, in particular smaller ones. For these projects, political alignment is associated with an average increase in public funding by almost 10,000 euro. Our results suggest that public funds for research, development and innovation projects could be used more efficiently than they are.
Many policies target the economic and social consequences of regional inequality. This study expe... more Many policies target the economic and social consequences of regional inequality. This study experimentally investigates factors explaining the public degree of consent to financial transfers to disadvantaged regions. The main hypothesis of this study is that most people use the deservingness-heuristic not only to judge individuals but also to judge regions. We argue that people advocate interregional transfers based on perceived deservingness determined by recipient region’s need, lack of responsibility for the need, likelihood of reciprocity, and by a shared identity. To support this hypothesis, we conducted a factorial survey in Germany asking respondents to rate transfers to needy regions under different hypothetical conditions. We demonstrate, as predicted by the deservingness hypothesis, that consent to transfers to other regions is positively influenced by the extent of need and, in particular, past effort of the recipient region as well as by a shared identity. The results s...
In this paper, we analyze the impact of policy-induced opportunity costs and restrictions on the ... more In this paper, we analyze the impact of policy-induced opportunity costs and restrictions on the outcomes of auctions to subsidize ground-mounted photovoltaic (PV) systems in Germany since 2015. First, we examine the incidence of opportunity cost reductions for some suppliers in a simple theoretical auction model. Second, we descriptively study the volumes and prices in PV auctions in Germany. Finally, we analyze a quasi-experiment: the opening of auctions for farmland in disadvantaged areas in some German states from 2017. We show that policy-induced opportunity cost reductions lead to greater success in PV auctions only in the state of Bavaria, which has more generous quantity restrictions and is generally expected to be more supportive of solar power suppliers after 2017. As a result, there is an interregional redistribution in favor of a single state that enables and administratively effectively implements support for disadvantaged areas.
This paper examines how short-term rentals are changing living conditions and the composition of ... more This paper examines how short-term rentals are changing living conditions and the composition of the population in affected parts of a town. First, to analyze the relation between quality, distance, and rents, we develop a spatial monocentric city model with varying housing quality levels. Second, for 200 m grids in the city of Berlin (Germany) in 2019, we show that the proportion of low and medium quality residential units correlates positively near the city center with the probability of Airbnb listings and the number of these listings, but negatively in the suburbs. Third, applying fixed effect and IV strategies, we investigate the impact of Airbnb listings on living conditions and the composition of the population in the almost 450 planning areas of Berlin in the years 2016–2019. We show that Airbnb offers increase the number of residents with long periods of residence and reduce the number of residents in low-quality residential environments, but we do not find above-average effects on socially weak groups.
FEN: Differences in Taxation & Corporate Finance (Topic), 2009
This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corpo... more This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corporate taxes and multinational enterprises choose tax-efficient capital-to-debt ratios. Under separate accounting, multinationals shift debt from low-tax to high-tax countries. The Nash equilibrium of the tax competition game is characterized by underprovision of publicly provided goods. Under formula apportionment, the country-specific capital-to-debt ratio of a multinational’s affiliate is independent of the jurisdiction’s tax rate. Public good provision is either too large or too small. If the debt externality is not negative, there is clearly underprovision under formula apportionment.
This paper analyzes a closed, essentially linear polycentric city with homogenous households who ... more This paper analyzes a closed, essentially linear polycentric city with homogenous households who probabilistically select their workplace and residence locations. The study utilizes a continuous logit model to describe household location choices. In contrast to the classic urban model with deterministic location choices, the continuous logit model predicts noticeable direct effects of more than one workplace on land rents, asymmetry of the land rent schedule around secondary business districts, incomplete segregation of citizens who work in different business centers and, therefore, cross commuting, and incomplete segregation of workers and farmers.
This paper proposes the question whether or not traveling expenses to work should be deductible f... more This paper proposes the question whether or not traveling expenses to work should be deductible from the income tax base. In order to answer this question, a simple model of (im-) perfect household and worker mobility is employed. The focus of the analysis is on the efficient use of land and the efficient allocation of people and labor in a multi-region framework. The paper shows that deductibility is inefficient only if households are per-fectly mobile and if households cannot choose their place of work. If the region of work is not exogenously fixed, traveling expenses to work should be deductible at more than one hundred percent, even if households choose simultaneously the place of work and the region of residence, and even if tax rates are not standardized within the federation.
We examine long-term lending in the course of the Covid-19 pandemic in Germany. We show that the ... more We examine long-term lending in the course of the Covid-19 pandemic in Germany. We show that the pandemic is associated with increased lending by credit cooperatives and savings banks. The restrictions imposed by governments on social and economic life and the economic impact thereof, measured in terms of planned short-time work, show a significant correlation with the level of lending by all banks.
In this paper, we analyze several local referendums on land development and land-use regulation i... more In this paper, we analyze several local referendums on land development and land-use regulation in the City of Erlangen (Germany) between 2011 and 2018. To identify the positive influence of the travel distance on approval for land development, we control for distance to the city center and density, employ a two-way fixed-effect model, and use spatial instruments. We also analyze the heterogeneity of city dwellers' preferences for the development of residential and commercial areas. In particular, we examine the differences between homeowners and tenants in this regard.
Zusammenfassung Höhere Mieten bzw. Immobilienpreise und/oder niedrige Löhne werden auf funktionie... more Zusammenfassung Höhere Mieten bzw. Immobilienpreise und/oder niedrige Löhne werden auf funktionierenden Märkten die höhere natürliche Standortattraktivität einer Region bzw. ein attraktiveres Angebot öffentlicher Güter ausgleichen, wenn die Menschen Wohn- und Arbeitsort frei wählen können. Wenn Lohn- und Mietenunterschiede zwischen lokalen Wohnungs- und Arbeitsmärkten durch staatliche Preisregulierung verhindert bzw. reduziert werden, dann führt das in einigen Regionen zu Nachfrage- und in anderen Regionen zu Angebotsüberschüssen. Wanderungsbewegungen, die Versorgungsengpässe verstärken können, werden ausgelöst. Auf Märkten mit Friktionen allerdings haben neben Preisen auch Mengen eine kompensatorische Funktion. Längere Suchzeiten auf lokalen Wohnungs- und Arbeitsmärkten wirken ebenfalls den Anziehungskräften attraktiver Standorte entgegen. Dieser Aufsatz stellt die grundlegenden Mechanismen dar und erläutert diese anhand stilisierter Fakten.
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Papers by Matthias Wrede