Working papers (and mimeos)
"Prediction Markets, the True Value of the Revolving Door, and the U.S. Cabinet" [CESifo Working Paper]
with Benjamin Koch and Simon Luechinger.
Abstract: We estimate the value of the revolving door for firm executives and directors joining the cabinets of the Trump I and Biden administrations. By combining intraday stock and prediction market data, we take the degree of anticipation of political appointments into account and we offer estimates for the true value of the revolving door. Following nominations, stock prices and expected appointment probabilities rise strongly for nominees and drop modestly for runners up. Although largely anticipated, prediction markets still move significantly on nomination announcements. For positive jumps in prediction markets, we also find large positive stock price reactions.
Media coverage: Die Presse
"The Value of Investor-State Dispute Settlement (ISDS)"
with Maximilian Fleig and Gabriele Spilker, mimeo.
Abstract: Most investment treaties and a growing number of international trade treaties include provisions that allow for investor-state dispute settlements (ISDS). International investors can sue governments in case of alleged expropriation. This paper identifies the value of ISDS-clauses for investors. Our preferred empirical strategy exploits an ideal setting for an event study: The sudden and surprising news about a potential executive order by U.S. President Trump to withdraw from NAFTA, implying the loss of ISDS-provisions for U.S.-investors in Canada and Mexico. For this event and a rich set of firms listed in the United States with foreign affiliates in Mexico and/or Canada, we find statistically significant and robust negative abnormal returns consistent with a positive and economically relevant value of ISDS.
"What You Get in Return(s): Donor Country Incentives and Unilateral Trade Liberalization"
with Stefan Suttner, mimeo.
Abstract: The U.S. Generalized System of Preferences (GSP) is an important example for unilateral trade liberalization. It is supposed to encourage economic development in poorer countries by providing non-reciprocal preferential market access. While the academic literature has so far focused on the effects for beneficiary countries, little is known about the incentives for donor countries to grant such preferential market access in the first place. In this paper, we shed light on the donor side by characterizing firms that actively engage in lobbying in support of the U.S. GSP program in the United States and by assessing the stock market reactions to GSP news of firms linked to this program on the donor side. More specifically, we exploit announcements of withdrawals of U.S. GSP preferences for formerly eligible countries and look at listed firms with offshoring exposure to those countries as reported to the U.S. SEC. We find negative abnormal returns for these offshoring firms and document lobbying activity, demonstrating vested business interests in the GSP program also in the United States.
"Cross-border Commuting, Gender Differences, and the Outside Option"
with Christian Kleinertz and Klaus Nowotny, mimeo.
Abstract: We study a cross-border commuting reform that granted German workers in the German-Swiss border region access to the high-wage Swiss labour market. This exogenous increase in German workers‘ outside option led to an increase in average wages paid by German establishments in the border region. But this wage increase is not homogenous across worker types. First, high-skilled workers enjoyed a higher wage increase than low-skilled workers, consistent with a stronger increase in Swiss-labor demand for high-skilled German workers. Second, the positive wage effects only accrue to men in the border region, but not to women, consistent with gender differences in the willingness to commute. The outside option clearly seems to play an important role in wage determination and can be heterogeneous.
"The Impact of Political Risk on Sovereign Bond Spreads: Evidence from Latin America"
with my worst co-author - myself; he ruthlessly prioritizes other co-authors over himself, mimeo.
Work in Progress (watch out - only working titles)
"The Mafia, Politicians, and the Firm"
with Marie Poprawe
"Winners and Losers from Trade Liberalization: A Global Capital Market Perspective at the Firm Level"
with Peter Egger and Katharina Erhardt
"Gambling for Resurrection? The Influence of Luck on Performance and Risk-Taking in a Competitive Environment"
with Peter Egger