Research
Prof. Dr. Volker Nitsch

Prof. Dr. Volker Nitsch

Professor for International Economics

Contact

work +49 6151 16-57261

Work S1|03 185
Hochschulstraße 1
64289 Darmstadt

last modified: March 24, 2020

My research is organized by topic. I have recently worked on:

  • International Trade: borders; currency unions; duration; frictions; integration; trade finance
  • International macro and finance: capital flows; currency unions, illicit flows; sanctions
  • Economic diplomacy: institutions; sanctions; travel
  • Central bank governance
  • Economic geography

Under Attack: Terrorism and International Trade in France, 2014-16
(with Isabelle Rabaud)
documents an immediate and lasting decline in cross-border trade after a mass terrorist attack
a draft is available as LEO Working Paper 2019-12 (opens in new tab)

Same Same But Different: Dialects and Trade
(with Alfred Lameli, Jens Südekum and Nikolaus Wolf)
German Economic Review (August 2015)
finds that similarities in the local dialect of the German language positively affect trade between German regions; argues that the trade-promoting effect of language is likely to reflect cultural ties
a draft is available as a pdf file (opens in new tab), IZA Discussion Paper #7397 (opens in new tab) and CESifo Working Paper #4245 (opens in new tab)
a non-technical summary of our results (in German) is available from capital.de (opens in new tab)
there has been coverage in the Frankfurter Allgemeine Zeitung (opens in new tab), the Neue Zürcher Zeitung (opens in new tab), the Darmstädter Echo (opens in new tab), Blick (opens in new tab) and Geo (opens in new tab) (all in German)

Terrorismus und Internationaler Handel: Probleme und Ergebnisse empirischer Untersuchungen
DIW Vierteljahreshefte (4/2009)
a draft version is available as a pdf file (opens in new tab) (in German)

Terrorism, Tears, and Trade
finds that terrorism reduces trade if attacks are violent and more frequent; also, it's only exports that fall
a preliminary draft version is available as a pdf file (opens in new tab)
Spiegel Online (opens in new tab) has a quote (in German)

Terrorism and International Trade: An Empirical Investigation
(with Dieter Schumacher)
European Journal of Political Economy (June 2004)
reprinted in The Economic Analysis of Terrorism, edited by Tilman Brück. Routledge, 2006
uses a gravity model to estimate the effect of terrorism and warfare on international trade
an earlier version is available as DIW Discussion Paper #353 (opens in new tab)
results were quoted in the Financial Times Deutschland (in German) in March 2004 (opens in new tab), July 2005 (opens in new tab) and in May 2011 (opens in new tab), and the Neue Zürcher Zeitung (opens in new tab)(in German)

What Do Central Bankers Do? Evidence from the European Central Bank's Executive Board
(with Harald Badinger)
describes and analyzes patterns in the time use of the ECB's Executive Board members
a draft is available as a pdf file (opens in new tab), WU Wien Department of Economics Discussion Paper No. 277 (opens in new tab) and CESifo Working Paper #7467 (opens in new tab)
Sueddeutsche (opens in new tab) has covered the paper (in German)

On the Design of Public Institutions: Evidence from Financial Supervision
Ensayos sobre Política Económica (April 2015)
argues that the functional structure of public administration mimics that of other institutions in a country
a draft is available as a pdf file (opens in new tab) and TUD discussion paper #221 (opens in new tab)

National Representation in Supranational Institutions: The Case of the European Central Bank
(with Harald Badinger)
Journal of Comparative Economics (February 2014)
reprinted in Governance and Regulation in the European Union, edited by Christian Koenig and Ludger Kühnhardt. Nomos, 2017
examines the national composition of the management structure of the ECB
a draft is available as a pdf file (opens in new tab)
an earlier version of the paper was circulated as CESifo Working Paper #3573 (opens in new tab)
a non-technical summary, prepared for the CESifo DICE Report, is available as a pdf file (opens in new tab)
findings are discussed in the Handelsblog (in German (opens in new tab)/ English (opens in new tab)), FAZ (opens in new tab), Austria's, Die Presse (1 (opens in new tab), 2 (opens in new tab)), the Irish Times (opens in new tab), Handelsblatt (opens in new tab) and Sueddeutsche (opens in new tab)

Too Many Cooks? Committees in Monetary Policy
(with Helge Berger)
Southern Economic Journal (October 2011)
analyzes the association between monetary policy outcomes and the number of monetary policy decision-makers; finds a non-linear U-shaped relationship, where inflation is minimized when the monetary policy committee consists of seven to ten members
a draft is available as a pdf file (opens in new tab); the paper is also circulated as CESifo Working Paper #2274 (opens in new tab), FU Discussion Paper 2008/08 (opens in new tab) and KOF Working Paper No. 195 (opens in new tab)
a non-technical summary article is available as a pdf file (opens in new tab) or from Vox
The Economist (opens in new tab) has a chart that partly draws on information from our data set (here is the version from the print edition (opens in new tab))

Central Bank Boards around the World: Why Does Membership Size Differ?
(with Helge Berger and Tonny Lybek)
European Journal of Political Economy (December 2008)
argues that optimal central bank board size varies across countries; examines empirically differences in board size across 83 central banks and finds that size is associated with various country characteristics
a draft is available as a pdf file (opens in new tab); an ealier version was circulated as CESifo Working Paper #1897 (opens in new tab); a longer version is available as IMF Working Paper 06/281 (opens in new tab); final version is available as FU Discussion Paper 2008/05 (opens in new tab)
results are discussed in the Neue Zürcher Zeitung (opens in new tab) (in German)

Freeze! Financial Sanctions and Bank Responses
(with Matthias Efing and Stefan Goldbach)
finds that German banks reduce their positions in sanctioned countries; however, branches and subsidiaries abroad do not respond to the imposition of sanctions
awarded the Best Paper in Corporate Finance Award 2019 of the Society for Financial Studies
a draft is available as Deutsche Bundesbank Discussion Paper 45/2018 (opens in new tab) and CESifo Working Paper #7424

Cheap Talk? Financial Sanctions and Non-Financial Activity
(with Tibor Besedeš and Stefan Goldbach)
analyzes the business responses of German non-financial entities to the imposition of sanctions
a draft is available as Deutsche Bundesbank Discussion Paper 09/2018 and CESifo Working Paper #7069 (opens in new tab)
findings have been covered by Frankfurter Allgemeine (in German) (opens in new tab)

You're Banned! The Effect of Sanctions on German Cross-Border Financial Flows
(with Tibor Besedeš and Stefan Goldbach)
Economic Policy (April 2017)
examines patterns of adjustment in bilateral financial relationships after the imposition of a sanction along various dimensions
a draft is available as a pdf file (opens in new tab) and Deutsche Bundesbank Discussion Paper 12/2016

Passport, Please! Travels, Travails and Trade
Applied Economics Letters (2019)
argues that visa policies have economic consequences; finds that countries which issue more powerful passports experience more trade
a draft is available as a pdf file (opens in new tab)

Trips and Trade
“Research Handbook on Economic Diplomacy”, edited by Peter A.G. van Bergeijk and Selwyn J.V. Moons. Edward Elgar 2018.
discusses and reviews the literature on travels by politicians and international trade
a draft is available as a pdf file (opens in new tab) and TUD Discussion Paper #230 (opens in new tab)

State Visits and International Trade
The World Economy (December 2007)
finds that state visits by heads of state are typically associated with a moderate increase in exports
current version is available as a pdf file (opens in new tab)and FU Discussion Paper 2007/03; an earlier version circulated as CESifo Working Paper #1582 (opens in new tab) and HKIMR working paper 3/2007 (opens in new tab)
Reuters (opens in new tab)has a story on this (in German); DIE ZEIT (opens in new tab) has an article (in German); Le Temps (opens in new tab) has covered the paper (in French); NRC Handelsblad (opens in new tab) has a reference to the research findings reported in the paper (in Dutch); CESifo has a press release

Does the G7/G8 Promote Trade?
Economics Letters (January 2007)
finds that membership in the Group of Eight increases trade; puzzling because the G7/G8 is an unofficial forum with weak enforcement mechanisms
a draft is available as a pdf file (opens in new tab) and FU Discussion Paper 2006/16

Trade Misinvoicing in Developing Countries
discusses selected issues in the analysis of trade misinvoicing with special reference to evidence from developing countries
the report is available as CGD Policy Paper 103

Trillion Dollar Estimate: Illicit Financial Flows from Developing Countries
reviews the empirical methodology that underlies estimates of illicit financial flows
a draft is available as TUD discussion paper #227 (opens in new tab)
results have been discussed in The Guardian

Trade Misinvoicing
discusses selected issues in the analysis of trade misinvoicing
a draft is available as a pdf file (opens in new tab)
“The Routledge Companion to Tax Avoidance Research”, edited by Nigar Hashimzade and Yulia Epifantseva. Routledge, 2018

Trade Mispricing and Illicit Flows
“Draining Development?: The Sources, Consequences and Control of Flows of Illicit Funds from Developing Countries”, edited by Peter Reuter. The World Bank 2012
prepared for a World Bank conference on Illicit Financial Flows
a draft is available as a pdf file (opens in new tab)
the World Bank has a video of the presentation

Gotcha! A Profile of Smuggling in International Trade
(with Helge Berger)
“Illicit Trade and the Global Economy” edited by Cláudia Costa Storti and Paul De Grauwe. MIT Press, 2012
finds that reporting gaps in international trade statistics partly represent smuggling activities
a draft is available as a pdf file (opens in new tab) and CESifo Working Paper #2475 (opens in new tab); an earlier version was circulated as FU Dicussion Paper 2008/06 (opens in new tab)

Ease vs. Noise: On the Conflicting Effects of Transportation Infrastructure
(with Gabriel Ahlfeldt and Nicolai Wendland)
Journal of Environmental Economics and Management (November 2019)
employs quasi-experimental research methods to disentangle the offsetting noise and accessibility effects of mass transit, analyzing land price effects of the opening of the first electrified metro rail in Berlin in 1902
a draft is available as a pdf file (opens in new tab) and CESifo Working Paper #6058 (opens in new tab)

The IOC's Midas Touch: Summer Olympics and City Growth
(with Nicolai Wendland)
Urban Studies (March 2017)
finds that host cities experience a relative decline in population growth after the Games; argues that being awarded the Summer Olympics has, on average, a negative impact on cities
an earlier version was circulated as CESifo Working Paper #4378 (opens in new tab)

Fly or Cry: Is Airport Noise Costly?
examines voting behavior on the closure of Tempelhof airport; finds that voters in the vicinity of the airport strongly support continued operations; as a result, noise appears less relevant than previously thought
a draft is available as a pdf file (opens in new tab); an earlier version was circulated as CESifo Working Paper #2732 (opens in new tab)

Trade Policy and Urban Concentration: New Evidence
Journal of Economic Integration (June 2006)
argues that previous findings of a negative association between openness and urbanization are not robust
a draft is available as a pdf file (opens in new tab)

Zipf Zipped
Journal of Urban Economics (January 2005)
performs a meta-analysis of Zipf's law for cities
a draft is available as FU Discussion Paper 2004/16
the paper has been one of the ten most cited articles (opens in new tab) in the Journal of Urban Economics 2004-2008
interested readers may want to have a look at Ed Glaeser's blog entry in the New York Times

Does History Matter for Urban Primacy? The Case of Vienna
Regional Science and Urban Economics (July 2003)
finds that the break-up of Austria-Hungary had only a temporary depressing effect on the city of Vienna

Cutting the Credit Line: Evidence from Germany
(with Stefan Goldbach)
finds that foreign sales are insensitive to variations in external finance; argues that exporting firms are perhaps particularly good borrowers
a draft is available as a pdf file (opens in new tab) and Deutsche Bundesbank Discussion Paper 25/2015

Extra Credit: Bank Finance and Firm Export Status in Germany
(with Stefan Goldbach)
The World Economy (July 2014)
estimates exporter premium in bank lending
a draft is available as a pdf file (opens in new tab) and TUD discussion paper #218 (opens in new tab)

Make or Break: The Varying Trade Effects of the Euro
highlights the effects of the euro on trade disintegration
a draft is available as a pdf file (opens in new tab)

On the Persistence of Trade Imbalances: Evidence from Europe
(with Helge Berger) „Global Interdependence, Decoupling and Recoupling“ edited by Yin-Wong Cheung and Frank Westermann, MIT Press, 2013
finds that exchange rate variability affects the speed of external adjustment;
trade imbalances are more persistent when exchange rates are fixed or there are other inflexibilities
a draft is available as a pdf file (opens in new tab) and TUD discussion paper #217 (opens in new tab)

Wearing Corset, Losing Shape: The Euro's Effect on Trade Imbalances
(with Helge Berger)
Journal of Policy Modeling (January/February 2014)
finds that exchange rate stability is typically associated with larger trade imbalances;
various determinants of bilateral trade surpluses and deficits are identified
a draft is available as a pdf file (opens in new tab) and IMF Working Paper 10/226 (opens in new tab)
some coverage by press and newswires: DowJones (opens in new tab), Wall Street Journal (opens in new tab), Die Presse (opens in new tab) (in German)
an executive summary version is available from Vox
a non-technical summary of the results (in German) appeared in Ifo Schnelldienst (opens in new tab) 24/2010 and Ökonomenstimme

Bilateral Imbalances in Europe
(with Helge Berger)
CESifo Economic Studies (September 2013)
finds that trade and financial flows between countries are strongly linked in the euro area
a draft is available as a pdf file (opens in new tab) and TUD discussion paper #214 (opens in new tab)

Inflexibilities and Trade Imbalances: Evidence from Europe
(with Helge Berger)
“The Economic Crisis and European Integration” edited by Wim Meeusen. Edward Elgar, 2011
examines the impact of rigidities on trade imbalances
a draft is available as a pdf file (opens in new tab)

Pasta, Pets and Prostitution: The Euro's Effect on Prices
(with Sarah M. Lein)
examines product-level price dispersion in Europe; finds no decline in price dispersion among EMU member countries after the introduction of the euro
some results are reported in a study for the European Commission

Scalpel, Please! Dissecting the Euro's Effect on Trade
(with Mauro Pisu)
examines trade at various levels of disaggregation, including firm-level trade data for Belgium; finds at best a moderate effect of the euro on trade, but the propensity of firms to export to EMU and the number of products exporters ship to EMU member countries has increased, with particularly strong effects for small and less productive firms
a non-technical summary article is available as a pdf file (opens in new tab) or from Vox

Switching Monies: The Effect of the Euro on Trade Between Belgium and Luxembourg
finds that switching from Belgian (and Luxembourgian) Franc to Euro had no measurable effect on the bilateral trade relationship
a draft is available as a pdf file (opens in new tab)

Monetary Integration and Trade: What Do We Know?
“Regional Integration, Economic Development and Global Governance” edited by
Ulrich Volz. Edward Elgar, 2011
reviews the recent literature on monetary integration and trade from a European perspective
a draft is available as a pdf file (opens in new tab)

Zooming Out: The Trade Effect of the Euro in Historical Perspective
(with Helge Berger)
Journal of International Money and Finance (December 2008)
reprinted in “Recent Developments in Exchange Rate Economics” edited by Mark P. Taylor and Meher Manzur. Edward Elgar, 2013
argues that the increase in trade between EMU member countries after the adoption of the euro is a continuation of a long-term trend
current version is available as a pdf file (opens in new tab)
an earlier version was circulated as CESifo Working Paper #1435 (opens in new tab) and FU Discussion Paper 2005/05
a summary is available as a web essay (opens in new tab) prepared for Economic Policy
a non-technical version (opens in new tab) (in German) appeared in Ifo Schnelldienst 15/2005 (published version (opens in new tab) 2MB);
CESifo has a press release
the paper has been covered by vwd-Dow Jones (opens in new tab); there has also been an article in the Handelsblatt (opens in new tab)(in German) and in the Neue Zürcher Zeitung (opens in new tab) (in German), and our results have been mentioned in the Frankfurter Allgemeine Zeitung (opens in new tab) (in German)
the topic has also been discussed in the 2005 report by the German Council of Economic Experts (opens in new tab) (in German) and a 2006 report by the French Conseil d'Analyse Économique (opens in new tab) (in French)

Currency Union Entries and Trade
“Globalization of Capital Markets and Monetary Policy” (contents and introduction (opens in new tab)) edited by
Jens Hölscher and Horst Tomann. Palgrave Macmillan, 2005
explores currency union entries in the post-war period and finds no change in trade patterns
current version is available as a pdf file (opens in new tab) and FU Discussion Paper 2005/09

The Non-Causality of the Common Currency Effect on Trade:
Evidence from the Monetary Union Between Belgium and Luxembourg
argues that the finding of a common currency effect on trade may be endogenous; finds no shift in bilateral trade intensity after Luxembourg's adoption of the Belgian franc

Comparing Apples and Oranges:
The Effect of Multilateral Currency Unions on Trade
“Monetary Unions and Hard Pegs: Effects on Trade, Financial Development and Stability” edited by Volbert Alexander, Jacques Mélitz, and George M. von Furstenberg. Oxford University Press, 2004
finds small trade effects for the CFA franc zone and the East Caribbean currency union conference version is available as a pdf file (opens in new tab); published version is available here (restricted access)

Honey, I Shrunk the Currency Union Effect on Trade
The World Economy (April 2002)
discusses Andrew Rose's finding that currency unions raise trade by factor 3; his reply is in the same issue

Tear Down this Wall: On the Persistence of Borders in Trade
(with Nikolaus Wolf)
Canadian Journal of Economics (February 2013)
examines intra-German trade integration after reunification; finds a considerable effect of the former “Iron Curtain” on trade, providing interesting insights for both the border effects and globalization literatures
a draft is available as a pdf file (opens in new tab) and CEPR Discussion Paper #7545 and CESifo Working Paper #2847 (opens in new tab)
results are summarized in a non-technical way in Vox
results are also discussed in an op-ed article in the FTD, Ökonomenstimme (both in German) and The Globalist
CESifo has a press release
a non-technical version (in German) has been prepared for ifo Dresden berichtet (opens in new tab) (published version)

Back to the Roots: Borders and Trade in Canada, 1933-39
finds identical border effects for British Columbia's trade in the 1930s and today; thereby questions explanations for the border effect based on border barriers
a draft is available as a pdf file (opens in new tab)

Border Effects and Border Regions: Lessons from the German Unification
Jahrbuch für Regionalwissenschaft (1/2004)
updates “Statistics Canada 2, Statistisches Bundesamt 1” and discusses implications for border regions
an earlier version is available as HWWA Discussion Paper #203

Statistics Canada 2, Statistisches Bundesamt 1:
What Does German Data Tell Us About the Home Bias in International Trade?
uses data on intra-German trade flows to estimate the border effect

It's Not Right, But It's Okay:
On the Measurement of Intra-National Trade Distances
discusses the population-based approach and the area-based approach to compute trade distances
a draft is available as a pdf file (opens in new tab)

National Borders and International Trade: Evidence from the European Union
Canadian Journal of Economics (November 2000)
estimates the border effect for EU countries
the paper was discussed in an op-ed in Canada's National Post (opens in new tab)
the paper ranks #19 (as of July 2007) in citation counts for articles that have been published in the CJE between 1989 and 2006

Die Another Day: Duration in German Import Trade
Review of World Economics (April 2009)
shows that the majority of trade relationships on the product level are small in value and short-lived; finds that survival probabilities are affected by exporter characteristics, product features and market structure
a draft is available as a pdf file (opens in new tab); a previous version was circulated as CESifo Working Paper #2085 (opens in new tab)
results are discussed in an op-ed article in the FTD (in German)

Measuring Economic and Institutional Integration
(with Helge Berger)
prepared for the “Handbook of the Economics of European Integration”, edited by Harald Badinger and Volker Nitsch. Routledge, 2015.
a draft is available as a pdf file (opens in new tab) and TUD discussion paper #225 (opens in new tab)

Institutional Arrangements and International Trade: Evidence from Hong Kong
argues that Hong Kong's various changes in monetary and political arrangements had no effect on the pattern of trade
a draft is available as a pdf file (opens in new tab)

The Trade Liberalization Effects of Regional Trade Agreements
(with Daniel Sturm)
finds that most RTAs have no effect on aggregate trade liberalization measures
current version is available as a pdf file (opens in new tab), as is a shortened version (opens in new tab)

Black Tie Required? How to Enter a Currency Union
“Designing the New European Union” edited by Helge Berger and Thomas Moutos. Elsevier, 2007
argues that there are no systematic pre-conditions for successful monetary integration
conference version is available as a pdf file (opens in new tab)

Have A Break, Have A … National Currency:
When Do Monetary Unions Fall Apart?
“Prospects for Monetary Unions after the Euro” (contents and introduction) edited by
Paul de Grauwe and Jacques Mélitz. MIT Press, 2005
aims to characterize currency union break-ups available as CESifo Working Paper #1113 (opens in new tab);
CESifo also offers a non-technical summary as a press release
the paper was the source for a quotation in L'Unione Sarda (opens in new tab) (in Italian)
results have also been discussed in the Handelsblatt (opens in new tab), FAS (opens in new tab), Wirtschaftswoche (opens in new tab), Deutsche Welle (opens in new tab) and Zeit online (opens in new tab) (all in German)

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Other Research at the Chair