WORKING PAPER
WORKING PAPER
TAX REVENUE FORECAST ERRORS: WRONG PREDICTIONS OF THE TAX BASE OR THE ELASTICITY?
(with M. Göttert)
In this paper, we disentangle tax revenue forecast errors into influences stemming from wrong macroeconomic assumptions and false predictions of the elasticities linking the tax base to its corresponding tax type. Across six tax types and the overall tax sum for Germany, we find a heterogeneous degree of relative importance of both sources. Whereas wrong macroeconomic assumptions matter most for profit-related taxes and the wage tax, false predictions of the elasticities mainly drive the forecast errors of the energy tax and the sales taxes. For the overall tax sum, more than two-third of the error can be attributed to wrong macroeconomic predictions and approximately one-third to false assumptions on the elasticity. Our results suggest that outsourcing the macroeconomic projections to an independent forecaster and methodological improvements can reduce tax revenue forecast errors.
Submitted
QUARTERLY GDP ESTIMATES FOR THE GERMAN STATES: NEW DATA FOR BUSINESS CYCLE ANALYSES AND LONG-RUN DYNAMICS
(with I. Wikman)
To date, only annual information on economic activity is published for the 16 German States. In this paper, we calculate quarterly regional GDP estimates for the period between 1995 to 2021, thereby improving the regional database in Germany. The new data set will regularly be updated when quarterly economic growth for Germany becomes available. We use the new data for an in-depth business cycle analysis and to estimate long-run growth dynamics. The business cycle analysis reveals large heterogeneities in the duration and amplitudes of state-specific fluctuations as well as in the degrees of cyclical concordance. Long-run trends are found to vary tremendously, with positive developments in economically strong regions and flat or even negative trends for economically much weaker states.
Revise and Resubmit: Oxford Bulletin of Economics and Statistics
REGIONAL INDUSTRIAL EFFECTS IN GERMANY FROM A POTENTIAL GAS DEFICIT
(with C. Schult)
We estimate potential regional industrial effects in case of a threatening gas deficit. For Germany, the reduction leads to a potential decrease in industrial value added by 1.6%. The heterogeneity across German states is remarkable, ranging from 2.2% for Rhineland-Palatinate to 0.7% for Hamburg. We emphasize the need for regional input-output tables to conduct economic analysis on a sub-national level, particularly when regional industrial structures are heterogeneous. The approximation with national figures can lead to results that differ both in magnitude and relative regional exposure. Our findings highlight that more accurate policy guidance can be achieved by improving the regional database.
Revise and Resubmit: German Economic Review
FROM SHOPPING TO STATISTICS: TRACKING AND NOWCASTING PRIVATE CONSUMPTION EXPENDITURES IN REAL-TIME
(with F. Fourné)
In this paper, we use high-frequency transaction data to develop a weekly tracker for private consumption expenditures. Furthermore, we apply the transaction data in a nowcasting experiment and compare their performance with other, readily available indicators that are regularly linked to private consumption in Germany. The weekly tracker produces precise estimates and can thus be used in real-time, especially in very turbulent times such as a pandemic or the high-inflation-phase in its aftermath. In terms of nowcast accuracy, the tracker outperforms all remaining indicators, making it a powerful tool for applied forecasting work. We plan to regularly publish the weekly consumption tracker in the future, thereby complementing the database for Germany.
Submitted
WHAT DRIVES GERMAN TREND OUTPUT GROWTH? A SECTORAL VIEW
(with L. Zarges)
In this paper, we outline material and capital linkages across sectors to quantify the role of the German production network in amplifying sectoral dynamics on aggregate trend gross domestic product growth. This allows us to study the impact of sectoral labor input and total factor productivity trend growth variation on the persistent decline in long-run output growth. Our estimation reveals that sector-specific developments have historically accounted for half of this long-term decline. Zooming into the reunification period, we find a pronounced decline of total factor productivity growth in Professional and Business Services together with a fall in labor input growth in the Construction sector to drive the sharp decline of German trend output growth over the 1990s. We further document significant changes regarding the sectors’ importance as input suppliers to the economy over the past decades. Our analysis identifies the labor-intensive Construction sector as a major input hub in the production network, its long-run amplification effect exceeding four times its share in value added. Given the impending demographic change, the low potential for automation in this sector may significantly reduce future German trend output growth.
[Working Paper] [Appendix]
Submitted
WORK IN PROGRESS
ECONOMIC FORECASTING WITH SPATIAL EFFECTS: AN ASSESSMENT FOR GERMAN DISTRICTS
In this reserach project, I will apply panel techniques to frecasting annual GDP growth at the German district level. mimeo
THE SLOWDOWN IN GERMAN TREND GDP GROWTH: AGGREGATE OR STATE-SPECIFIC FACTORS?
German trend GDP growth is falling for more than three decades. In this paper, I try to identify whether this decline is driven by aggregate and common factors or by state-specific factors and thus by regional features. mimeo
FORECASTING LABOR PRODUCTIVITY: A NEW MEASURE BASED ON BUSINESS SURVEY RESULTS
(with S. Sauer, K. Wohlrabe and T. Wollmershäuser)
In this paper, we develop a new measure for labor productivity from business survey results and test its properties to forecasting German data. mimeo