Research

Articles in Refereed Journals 

„Managerial Overconfidence and Bank Bailouts“
Daniel Gietl and Bernhard Kassner, 2020
Journal of Economic Behavior & Organization, vol. 179, pages 202-222.
Link to article
Abstract: Empirical evidence suggests that managerial overconfidence and government guarantees contribute substantially to excessive risk-taking in the banking industry. This paper incorporates managerial overconfidence and limited bank liability into a principal-agent model, where the bank manager unobservably chooses the level of risk. An overconfident manager overestimates the returns to risk. Our main result is that managerial overconfidence necessitates an intervention into banker pay. This is due to the bank’s exploitation of the manager’s overvaluation of bonuses, which causes excessive risk-taking in equilibrium and is amplified by government guarantees. Moreover, we show that an optimal bonus tax rises in overconfidence, if returns to risk-taking are positive. Finally, the model indicates that overconfident managers are more likely to be found in banks with large government guarantees, low bonus taxes, and lax capital requirements.

„Propagation of changes in demand through international trade: A Case study China
Jochen Andritzky, Bernhard Kassner and Wolf Heinrich Reuter, 2019
The World Economy, vol. 42(4), pages 1259-1285.

Link to article
Abstract: China’s economy, the second largest in the world, is undergoing a fundamental transition. Its transition from a strong focus on investment and exports towards a larger share of consumption could have important ramifications for China’s trading partners. Using China as a case study, this paper deploys a sectoral input–output (IO) analysis to take into account higher‐round spillovers from a reduction of import demand or a shift in the composition of the Chinese economy. This approach demonstrates strong indirect effects that exceed by far the initial shock from direct trade links, reflecting China’s integration into a closely knit global value chain. The result suggests that the ongoing transition in China will have important effects on the global economy.

„Can consumption growth in China keep up as investment slows?“
Mali Chivakul and Bernhard Kassner, 2019
Comparative Economic Studies, vol. 61(3), pages 381-412.
Link to article
Abstract: Rebalancing away from investment to consumption has been on China’s agenda in order to keep up higher growth rates. This paper uses both national- and provincial-level data to empirically answer the question how a slowdown in investment could have an impact on household consumption. Our empirical results from both the national- and provincial-level data using Bayesian vector autoregressions and panel regression methods suggest that investment has had a significant impact on household consumption beyond the standard household income channel. The effects are particularly strong in the post-global-financial-crisis period. Policy measures to encourage rebalancing away from investment should take the extra effect it may have on consumption beyond the impact on household income into account.

Other Articles

„Eine Analyse des Antwortverhaltens in der ifo Industrieumfrage“
Bernhard Kassner and Klaus Wohlrabe, 2018
ifo Schnelldienst, ifo Institute – Leibniz Institute for Economic Research at the University of Munich, vol. 71(3), pages 29-34, 02
Link to article

„Aktuelle Ergebnisse der ifo Investorenrechnung: Steigende Leasingquoten vor allem bei Fahrzeuginvestitionen“
Bernhard Kassner and Stefan Sauer, 2017
ifo Schnelldienst, ifo Institute – Leibniz Institute for Economic Research at the University of Munich, vol. 70(10), pages 30-32, 05
Link to article

Work in Progress

Taming Overconfident CEOs – Managerial Overconfidence and Risk-Taking in the Financial Sector After the Global Financial Crisis

The Effects of Overconfidence on the Political and Financial Behavior of a Representative Sample (with Ciril Bosch-Rosa and Steffen Ahrens)