Open Access

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.

This paper provides a quantitative approach to measuring the effectiveness of ambush marketing by using Google data. To our knowledge, it is one of the first studies that develop an empirical approach that directly measures the attention effect of ambush marketing in sports. The new data consists of 14 ambushers (treatment group) and 26 official sponsors (control group) and covers the time period of 2004 to 2012. These firms conducted marketing activities during the past football World Cups and European Championships. The innovation in our paper is the measurement method of attention by means of Google. The results are as follows: First ambush marketing increases product attention significantly. Second the product awareness of ambushers is greater or the same to that of official sponsors. Finally, we demonstrate that ambush marketing has positive impacts on the company's performance. Overall, we conclude that Google provide new insights for the analysis of ambush marketing.

This paper examines the relationship of asset Price determination via Google data. To capture this relation, I create a model and estimate several time series’ regressions. I use weekly data from 2004 to 2010 from 30 international banks. To my knowledge this is the first study which differentiates between Google’s search volume and Google’s search clicks. I show that asset prices are positively related to the rate of change in Google’s search volume, trading volume and the level of Google search clicks. Secondly, I demonstrate that the absolute level of Google’s search volume and Google’s search clicks behave differently regarding the asset price dynamics. Google’s search volume, which measures long-run searches, is negatively related while Google’s search clicks have a positive relationship to asset prices. Hence, Google’s data offer new insights on both measuring attention and pricing financial assets.

This white paper builds a new financial theory of euro area sovereign bond markets under stress. The theory explains the abnormal bond pricing and increasing spreads during the recent market turmoil. We find that the strong disconnect of bond spreads from the respective bonds’ underlying fundamental values in 2010 was triggered by an increase in asymmetric information and weak reputation of government policies. Both factors cause a normal bond market to switch into a crisis mode. Finally, those markets are prone to self-fulfilling bubbles in which the economic effects are amplified by herding behaviour arising from animal spirits. Altogether, this produces contagious effects and multiple equilibria. Thus, we argue that government bond markets in a monetary union are more fragile and vulnerable to liquidity and solvency crises. Consequently, the systemic mispricing of sovereign debt creates more macroeconomic instability and bubbles in the euro area than in a single country. In other words, financial markets are partly blind to national default risks in a currency union. Therefore, the current European institutional framework puts the wrong incentives in place and needs structural changes soon. To tackle the root causes we suggest more market incentives via consistent rules, pre-emptive austerity measures in good economic times, and a resolution scheme for heavily indebted countries. In summary, our paper enhances the bond market theory and provides new insights into the recent bond market turmoil in Europe.

Die Finanzkrise lies Europa und die Welt erzittern - die Staatsverschuldungskriese wurde zur Zerreißprobe für die Eurozone. Inzwischen hat sich die Situation wieder stabilisiert, doch nun steht die Eurozone vor der Herausforderung, einen Reform-Prozess anzustoßen, der das Überleben des Euros auf lange Sicht sichern soll.