Volkswirtschaft - Open Access LMU - Teil 03/03 Ludwig-Maximilians-Universität München

Exchange rate exposure of firms diminishes when imported intermediates
and exports are denominated in currencies that move together. Appreciations
of the domestic currency, raising foreign currency export prices,
then also reduce marginal costs, allowing firms to counter the increase
in foreign prices. Using firm-level data from seven European countries
I estimate a structural model showing how exchange rate pass-through
into sales depends on intermediate imports and the co-movement of export
and import related exchange rates. I find that operational hedging
requires firms to intentionally choose export and import regions with comoving
currencies. Analyzing the locational choice of firms confirms that
the co-movement of currencies indeed appears to be taken into consideration

We study how foreign competition affects the composition of investments inside firms. A parsimonious model predicts that firms have an incentive to shift their investments towards more short-term assets when exposed to tougher competition. Using data on expenditures of listed US companies into various asset classes with different lifespans, we document empirical evidence that is consistent with this prediction. Over a fifteen year period between 1995 and 2009, the rise in import competition is associated with a reduction of the firm-specific asset lifespan by about 4.5% on average. We additionally exploit the Chinese WTO accession as an exogenous shock in firm expectations about future exposure to competition.

Hans Albert hat in einigen Arbeiten den apriorischen Charakter des „neoklassischen Denkstils” kritisiert und treffend als „Modellplatonismus” bezeichnet. Die apriorische Denkhaltung findet sich aber nicht nur in der von Albert kritisierten Neoklassik, sondern vielleicht noch ausgeprägterer bei vielen modellfeindlichen Theoretikern, wie etwa den Österreichern, den Ordnungstheoretikern, den Vertretern der „constitutional economics” oder manchen neueren Vertretern der sozialen Marktwirtschaft. Es erscheint mir deshalb sinnvoll, dem Begriff „Modellplatonismus” den Begriff „Ordnungsplatonismus” an die Seite zu stellen. Die folgenden Bemerkungen sollen diese Kritik etwas erläutern.

This paper examines how IT influences global sourcing decisions. It develops a theoretical model to study how IT determines the decisions of firms located in the high-wage North whether to offshore production to a low-wage country in the South. Offshoring to South however is subject to costly communication reflected by partially incomplete contracting. More sophisticated IT allows more efficient communication between the Northern headquarter and its Southern intermediate input supplier and alleviates contractual frictions. The model provides several predictions about the impact of IT on the organization of the global supply chain. Complex industries for which codifiability and verifiability of information is a much harder task, are more likely to source intermediate inputs in countries with more efficient IT infrastructure. Considering the mode of firm organization, more efficient IT infrastructure is expected to reduce the share of intra-firm trade in more complex industries. These predictions are examined and validated using disaggregated industry-level trade data. Most importantly, these findings are robust to controlling for well-known sources of comparative advantage and determinants of firm organization such as factor endowments, financial development and contract enforcement.

The lack of coordination in the resolution of multinational banks has led to demands
for the increased centralization of resolution regimes. However, as this
paper argues, the anticipation of resolution procedures affects the incentives of
host countries to impose capital standards on their resident banks. Critically, it
is shown that overall welfare can even be decreased by introducing a centralized
resolution regime without fully centralizing capital requirements. As, in the aftermath
of the financial crisis, only countries that are not part of a supranational
resolution regime unilaterally and significantly increased the capital requirements
for their largest resident banks, this paper can help to understand and study the
heterogeneity of the observed regulatory approaches.

By introducing controlled-foreign-company (CFC) rules, the parent country of a multinational firm reserves the right to tax the income of the firm's foreign affiliates if the tax rate in the affiliate's host country is below a specified threshold. We identify the conditions under which binding CFC rules are part of the optimal tax mix when governments can set the statutory tax rate, a thin capitalization rule and the CFC rule. We also analyze the effects of economic and financial integration on the optimal policy mix. Our results correspond to the actual development of anti-avoidance rules in OECD countries.