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Bodo Herzog. Lieferkettengesetz: Europäische Lösung nötig. Wirtschaftsdienst 2021, 101, 412 -412.
AMA StyleBodo Herzog. Lieferkettengesetz: Europäische Lösung nötig. Wirtschaftsdienst. 2021; 101 (6):412-412.
Chicago/Turabian StyleBodo Herzog. 2021. "Lieferkettengesetz: Europäische Lösung nötig." Wirtschaftsdienst 101, no. 6: 412-412.
This article studies the hidden blemishes of two benchmark rulings of the European Court of Justice (ECJ). In 2015 and 2018, the ECJ approved two unconventional monetary instruments, among others ‘Outright Monetary Transactions’ and the ‘Public Sector Purchase Program’. Yet, there is a vigorous debate about both monetary operations in law and economics. In this interdisciplinary article, we address law and economic arguments in order to elucidate insights to the legal community. In particular, we elaborate on the legal implications of a variety of concerning issues such as public policy interference, effect on wealth redistribution, erosion of democratic legitimacy and lack of effectiveness of monetary policy. These topics remain disregarded in the ECJ rulings. Consequently, the verdicts do not identify the economic boundaries of the European Central Bank’s mandate appropriately.
Bodo Herzog. Hidden Blemish in European Law: Judgements on Unconventional Monetary Programmes. Laws 2021, 10, 18 .
AMA StyleBodo Herzog. Hidden Blemish in European Law: Judgements on Unconventional Monetary Programmes. Laws. 2021; 10 (2):18.
Chicago/Turabian StyleBodo Herzog. 2021. "Hidden Blemish in European Law: Judgements on Unconventional Monetary Programmes." Laws 10, no. 2: 18.
The article studies a novel approach of inflation modeling in economics. We utilize a stochastic differential equation (SDE) of the form d X t = a X t dt + b X t d B t H , where d B t H is a fractional Brownian motion in order to model inflationary dynamics. Standard economic models do not capture the stochastic nature of inflation in the Eurozone. Thus, we develop a new stochastic approach and take into consideration fractional Brownian motions as well as Lévy processes. The benefits of those stochastic processes are the modeling of interdependence and jumps, which is equally confirmed by empirical inflation data. The article defines and introduces the rules for stochastic and fractional processes and elucidates the stochastic simulation output.
Bodo Herzog. Modeling Inflation Dynamics with Fractional Brownian Motions and Lévy Processes. Linear and Non-Linear Financial Econometrics -Theory and Practice 2021, 1 .
AMA StyleBodo Herzog. Modeling Inflation Dynamics with Fractional Brownian Motions and Lévy Processes. Linear and Non-Linear Financial Econometrics -Theory and Practice. 2021; ():1.
Chicago/Turabian StyleBodo Herzog. 2021. "Modeling Inflation Dynamics with Fractional Brownian Motions and Lévy Processes." Linear and Non-Linear Financial Econometrics -Theory and Practice , no. : 1.
This article studies the renewed interest surrounding sustainable public finance and the topic of tax evasion as well as the new theory of information inattention. Extending a model of tax evasion with the notion of inattention reveals novel findings about policy instruments that can be used to mitigate tax evasion. We show that the attention parameters regarding tax rates, financial penalty schemes and income levels are as important as the level of the detection probability and the financial penalty incurred. Thus, our theory recommends the enhancement of sustainability in public policy, particularly in tax policy. Consequently, the paper contributes both to the academic and public policy debate.
Bodo Herzog. Sustainable Consumer Tax Evasion Theory under Information Inattention. Sustainability 2021, 13, 562 .
AMA StyleBodo Herzog. Sustainable Consumer Tax Evasion Theory under Information Inattention. Sustainability. 2021; 13 (2):562.
Chicago/Turabian StyleBodo Herzog. 2021. "Sustainable Consumer Tax Evasion Theory under Information Inattention." Sustainability 13, no. 2: 562.
Bodo Herzog. Optimal sequencing to reform the European economic and Monetary Union: a roadmap. Quantitative Finance and Economics 2021, 5, 311 -324.
AMA StyleBodo Herzog. Optimal sequencing to reform the European economic and Monetary Union: a roadmap. Quantitative Finance and Economics. 2021; 5 (2):311-324.
Chicago/Turabian StyleBodo Herzog. 2021. "Optimal sequencing to reform the European economic and Monetary Union: a roadmap." Quantitative Finance and Economics 5, no. 2: 311-324.
Dieser Beitrag deutet den Populismus aus Perspektive der Wirtschaftswissenschaften. Wir diskutieren die Politische Ökonomie des linken und rechten Populismus, inklusive der Angebots- und Nachfrageseite. Ursprung des Populismus sind die fortschreitende Globalisierung und der technologische Wandel. Allerdings kommt es aktuell zu einer Überformung durch das Phänomen des Postfaktischen. Das Zusammenwirken dieser Faktoren charakterisiert eine neue Form, den Informationspopulismus. Der Informationspopulismus wird zudem durch die Digitalisierung und Plattformökonomie intensiviert. Der in diesem Beitrag entwickelte Lösungsansatz, definiert als »inklusive Kommunikation«, modelliert die Informationsverbreitung stets im Spektrum der Gesamtverteilung. Mithin sollten Nachrichten nicht nur ein binäres Informationsquantum transportieren. Wir belegen die Funktionalität inklusiver Kommunikation und diskutieren die Praktikabilitätsgrenzen im digitalen Medienzeitalter.
Bodo Herzog. Informationspopulismus in der liberalen Demokratie. Der ungarische Staat 2020, 47 -73.
AMA StyleBodo Herzog. Informationspopulismus in der liberalen Demokratie. Der ungarische Staat. 2020; ():47-73.
Chicago/Turabian StyleBodo Herzog. 2020. "Informationspopulismus in der liberalen Demokratie." Der ungarische Staat , no. : 47-73.
This article studies the current debate on Coronabonds and the idea of European public debt in the aftermath of the Corona pandemic. According to the EU-Treaty economic and fiscal policy remains in the sovereignty of Member States. Therefore, joint European debt instruments are risky and trigger moral hazard and free-riding in the Eurozone. We exhibit that a mixture of the principle of liability and control impairs the present fiscal architecture and destabilizes the Eurozone. We recommend that Member States ought to utilize either the existing fiscal architecture available or establish a political union with full sovereignty in Europe. This policy conclusion is supported by the PSPP-judgement of the Federal Constitutional Court of Germany on 5 May 2020. This ruling initiated a lively debate about the future of the Eurozone and Europe in general.
Bodo Herzog. Corona-Bonds und EU-Verschuldung: Zukunftsvision oder Europäische Naivität? Zeitschrift für Wirtschaftspolitik 2020, 69, 148 -165.
AMA StyleBodo Herzog. Corona-Bonds und EU-Verschuldung: Zukunftsvision oder Europäische Naivität? Zeitschrift für Wirtschaftspolitik. 2020; 69 (2):148-165.
Chicago/Turabian StyleBodo Herzog. 2020. "Corona-Bonds und EU-Verschuldung: Zukunftsvision oder Europäische Naivität?" Zeitschrift für Wirtschaftspolitik 69, no. 2: 148-165.
The long-term fiscal and economic damage of eurobonds in a rule-based fiscal architecture — as history corroborates — would be greater than the historical challenge of the coronavirus pandemic, unless there is a political union in Europe.
Bodo Herzog. Whither Coronabonds? The Past and Future of the EMU in the Coronavirus Pandemic. Intereconomics 2020, 55, 155 -159.
AMA StyleBodo Herzog. Whither Coronabonds? The Past and Future of the EMU in the Coronavirus Pandemic. Intereconomics. 2020; 55 (3):155-159.
Chicago/Turabian StyleBodo Herzog. 2020. "Whither Coronabonds? The Past and Future of the EMU in the Coronavirus Pandemic." Intereconomics 55, no. 3: 155-159.
This paper studies option pricing based on a reverse engineering (RE) approach. We utilize artificial intelligence in order to numerically compute the prices of options. The data consist of more than 5000 call- and put-options from the German stock market. First, we find that option pricing under reverse engineering obtains a smaller root mean square error to market prices. Second, we show that the reverse engineering model is reliant on training data. In general, the novel idea of reverse engineering is a rewarding direction for future research. It circumvents the limitations of finance theory, among others strong assumptions and numerical approximations under the Black–Scholes model.
Bodo Herzog; Sufyan Osamah. Reverse Engineering of Option Pricing: An AI Application. International Journal of Financial Studies 2019, 7, 68 .
AMA StyleBodo Herzog, Sufyan Osamah. Reverse Engineering of Option Pricing: An AI Application. International Journal of Financial Studies. 2019; 7 (4):68.
Chicago/Turabian StyleBodo Herzog; Sufyan Osamah. 2019. "Reverse Engineering of Option Pricing: An AI Application." International Journal of Financial Studies 7, no. 4: 68.
This paper generalizes the theory of policy uncertainty with the new literature on rational inattention. First, the model demonstrates that inattention is dependent on the signal variance and the policy parameter. Second, I discover a novel trade-off showing that a policy instrument mitigates attention. Third, the policy instrument is non-linear and reciprocal to both the size and variance of the signal. The unifying theory creates new implications to economic theory and public policy alike.
Bodo Herzog. Optimal policy under uncertainty and rational inattention. Research in International Business and Finance 2019, 50, 444 -449.
AMA StyleBodo Herzog. Optimal policy under uncertainty and rational inattention. Research in International Business and Finance. 2019; 50 ():444-449.
Chicago/Turabian StyleBodo Herzog. 2019. "Optimal policy under uncertainty and rational inattention." Research in International Business and Finance 50, no. : 444-449.
This paper develops a new methodology in order to study the role of dynamic expectations. Neither reference-point theories nor feedback models are sufficient to describe human expectations in a dynamic market environment. We use an interdisciplinary approach and demonstrate that expectations of non-learning agents are time-invariant and isotropic. On the contrary, learning enhances expectations. We uncover the “yardstick of expectations” in order to assess the impact of market developments on expectations. For the first time in the literature, we reveal new insights about the motion of dynamic expectations. Finally, the model is suitable for an AI approach and has major implications on the behaviour of market participants.
Bodo Herzog. Dynamic Expectation Theory: Insights for Market Participants. Journal of Risk and Financial Management 2019, 12, 77 .
AMA StyleBodo Herzog. Dynamic Expectation Theory: Insights for Market Participants. Journal of Risk and Financial Management. 2019; 12 (2):77.
Chicago/Turabian StyleBodo Herzog. 2019. "Dynamic Expectation Theory: Insights for Market Participants." Journal of Risk and Financial Management 12, no. 2: 77.
This article investigates the fundamental value of digital platforms, such as Facebook and Google. Despite the transformative nature of digital technologies, it is challenging to value digital services, given that the usage is free of charge. Applying the methodology of discrete choice experiments, we estimated the value of digital free goods. For the first time in the literature, we obtained data for the willingness-to-pay and willingness-to-accept, together with socio-economic variables. The customer’s valuation of free digital services is on average, for Google, 121 € per week and Facebook, 28 €.
Bodo Herzog. Valuation of Digital Platforms: Experimental Evidence for Google and Facebook. International Journal of Financial Studies 2018, 6, 87 .
AMA StyleBodo Herzog. Valuation of Digital Platforms: Experimental Evidence for Google and Facebook. International Journal of Financial Studies. 2018; 6 (4):87.
Chicago/Turabian StyleBodo Herzog. 2018. "Valuation of Digital Platforms: Experimental Evidence for Google and Facebook." International Journal of Financial Studies 6, no. 4: 87.
Bodo Herzog. Reforming the Eurozone: Assessment of the Reform Package by the European Commission – Treating Symptoms or Root Causes? Economics & Sociology 2018, 11, 59 -77.
AMA StyleBodo Herzog. Reforming the Eurozone: Assessment of the Reform Package by the European Commission – Treating Symptoms or Root Causes? Economics & Sociology. 2018; 11 (3):59-77.
Chicago/Turabian StyleBodo Herzog. 2018. "Reforming the Eurozone: Assessment of the Reform Package by the European Commission – Treating Symptoms or Root Causes?" Economics & Sociology 11, no. 3: 59-77.
Die weiterhin hohen Schulden in einigen Staaten der Europäischen Wirtschafts- und Währungsunion lassen nach wie vor staatliche Insolvenzen befürchten. Um die entstandenen Probleme zu bewältigen, aber auch damit eine solche Situation erst gar nicht eintritt, hält der Autor eine staatliche Insovenzordnung — mit Bail-out durch die anderen Mitgliedstaaten nur in Notfällen — für erforderlich. Er schlägt einen staatlichen Abwicklungsmechanismus für überschuldete Euro-Länder vor, der auf einem Konzept des Sachverständigenrates für Wirtschaft von 2016 beruht. This article develops a new comprehensive policy proposal to stabilise the European Economic and Monetary Union in the long term. This public debt resolution mechanism attributes sufficient credibility and feasibility to the no bailout clause. It is a variant of a 2016 proposal by the German Council of Economic Experts. However, such a resolution mechanism has tough prerequisites in order to reduce moral hazard and free riding.
Bodo Herzog. Abwicklungsmechanismus für Mitgliedstaaten des Euroraums. Wirtschaftsdienst 2017, 97, 881 -888.
AMA StyleBodo Herzog. Abwicklungsmechanismus für Mitgliedstaaten des Euroraums. Wirtschaftsdienst. 2017; 97 (12):881-888.
Chicago/Turabian StyleBodo Herzog. 2017. "Abwicklungsmechanismus für Mitgliedstaaten des Euroraums." Wirtschaftsdienst 97, no. 12: 881-888.
The purpose of this paper is to study the impact of transparency on the political budget cycle (PBC) over time and across countries. So far, the literature on electoral cycles finds evidence that cycles depend on the stage of an economy. However, the author shows – for the first time – a reliance of the budget cycle on transparency. The author uses a new data set consisting of 99 developing and 34 Organization for Economic Cooperation and Development countries. First, the author develops a model and demonstrates that transparency mitigates the political cycles. Second, the author confirms the proposition through the econometric assessment. The author uses time series data from 1970 to 2014 and discovers smaller cycles in countries with higher transparency, especially G8 countries. Mathematical model and a respective econometric model testing. First, the author shows in the theoretical model that higher transparency mitigates the PBC. Second, the author confirms the theoretical proposition through the econometric model. The author confirms that the countries with higher transparency have smaller budget cycles. Or technically, the author cannot reject the null-hypothesis that the budget cycles are different due to transparency. As explained in the paper: one issue is the data limitations in respect to the transparency measures. Data for Google are just available since 2004. Data for broadband-subscription are just on annual frequency. But both limitations can be tackled in the future. Hence, the findings are first evidence and a benchmark for future studies. First, higher public transparency implies smaller budget cycles. In the end, this enhances the stability of economic and fiscal policy. Second, policy-makers have to consider the impact of higher transparency in respect to future election pledges. In a more transparent world, all voters can easily check the commitment of previous election pledges. Transparency helps to improve democracy and thus enhances the political credibility because it allows the voters to check the commitment of the elected policy-makers. First, the author shows – for the first time – a reliance of the budget cycle on transparency. Second, the author is the first that build a new theoretical model that extends the existing literature in respect to transparency and the size of the budget cycle. Third, the author uses for the first time – in this literature – new internet-based data such as broadband-subscription and Google search data. Fourth, the author empirically proves the new hypothesis based on the new data sources.
Bodo Herzog. Does transparency mitigate the political budget cycle? Journal of Economic Studies 2017, 44, 666 -689.
AMA StyleBodo Herzog. Does transparency mitigate the political budget cycle? Journal of Economic Studies. 2017; 44 (5):666-689.
Chicago/Turabian StyleBodo Herzog. 2017. "Does transparency mitigate the political budget cycle?" Journal of Economic Studies 44, no. 5: 666-689.
This paper studies whether a monetary union can be managed solely by a rule-based approach. The Five Presidents’ Report of the European Union rejects this idea. It suggests a centralisation of powers. We analyse the philosophy of policy rules from the vantage point of the German economic school of thought. There is evidence that a monetary union consisting of sovereign states is well organised by rules, together with the principle of subsidiarity. The root cause of the euro crisis is rather the weak enforcement of rules, compounded by structural problems. Therefore, we suggest a genuine rule-based paradigm for a stable future of the Economic and Monetary Union.
Bodo Herzog; Minjae Choi. Policy Rules in the Economic and Monetary Union. Intereconomics 2017, 52, 51 -56.
AMA StyleBodo Herzog, Minjae Choi. Policy Rules in the Economic and Monetary Union. Intereconomics. 2017; 52 (1):51-56.
Chicago/Turabian StyleBodo Herzog; Minjae Choi. 2017. "Policy Rules in the Economic and Monetary Union." Intereconomics 52, no. 1: 51-56.
This paper analyzes different government debt relief programs in the European Monetary Union. I build a model and study different options ranging from debt relief to the European Stability Mechanism (ESM). The analysis reveals the following: First, patient countries repay debt, while impatient countries more likely consume and default. Second, without ESM loans, indebted countries default anyway. Third, if the probability to be an impatient government is high, then the supply of loans is constrained. In general, sustainable and unsustainable governments should be incentivized differently especially in a supranational monetary union. Finally, I develop policy recommendations for the ongoing debate in the Eurozone.
Bodo Herzog. Modelling Monetary and Fiscal Governance in the Wake of the Sovereign Debt Crisis in Europe. Economies 2016, 4, 9 .
AMA StyleBodo Herzog. Modelling Monetary and Fiscal Governance in the Wake of the Sovereign Debt Crisis in Europe. Economies. 2016; 4 (4):9.
Chicago/Turabian StyleBodo Herzog. 2016. "Modelling Monetary and Fiscal Governance in the Wake of the Sovereign Debt Crisis in Europe." Economies 4, no. 4: 9.
This paper is a commentary on the book ‘Probability and Stochastic Processes’ from Ionut Florescu. The book is an excellent introduction to both probability theory and stochastic processes. It provides a comprehensive discussion of the main statistical concepts including the theorems and proofs. The introduction to probability theory is easy accessible and a perfect starting point for undergraduate students even with majors in other subjects than science, such as business or engineering. The book is also up-to-date because it includes programming code for simulations. However, the book has some weaknesses. It is less convincing in more advanced topics of stochastic theory and it does not include solutions to excises and recent research trends.
Bodo Herzog. A Review on ‘Probability and Stochastic Processes’. American Journal of Theoretical and Applied Statistics 2016, 5, 23 .
AMA StyleBodo Herzog. A Review on ‘Probability and Stochastic Processes’. American Journal of Theoretical and Applied Statistics. 2016; 5 (1):23.
Chicago/Turabian StyleBodo Herzog. 2016. "A Review on ‘Probability and Stochastic Processes’." American Journal of Theoretical and Applied Statistics 5, no. 1: 23.
Bodo Herzog. A Behavioural Model of European Bond Markets. Journal of Stock & Forex Trading 2014, 3, 1 .
AMA StyleBodo Herzog. A Behavioural Model of European Bond Markets. Journal of Stock & Forex Trading. 2014; 3 (3):1.
Chicago/Turabian StyleBodo Herzog. 2014. "A Behavioural Model of European Bond Markets." Journal of Stock & Forex Trading 3, no. 3: 1.
This paper is a brief review on the book ‘Capital in the Twenty-First Century’ by the French scholar Thomas Piketty. The book has started a new debate about inequality and capital taxation in Europe. It provides interesting empirical facts and develops a theory of the functioning of capitalist economies. However, I personally think the book is less convincing than recognized in the public debate. The demonstrated theory of economic growth in the book is elusive and lacks a psychological and behavioral underpinning. In fact, I do think that the increasing inequality and economic divergence are caused by capitalism but the psychological and behavioral aspects of humans are of similar or greater significance. Therefore, Piketty’s argument does not stimulate an open and scientifically founded debate in all aspects.
Bodo Herzog. A Review on ‘Capital in the 21th Century’. Psychology and Behavioral Sciences 2014, 3, 207 .
AMA StyleBodo Herzog. A Review on ‘Capital in the 21th Century’. Psychology and Behavioral Sciences. 2014; 3 (6):207.
Chicago/Turabian StyleBodo Herzog. 2014. "A Review on ‘Capital in the 21th Century’." Psychology and Behavioral Sciences 3, no. 6: 207.