On Tuesday, we welcomed Prof. Farzad Saidi and Prof. Benjamin Born to another successful “Inside Research” event, jointly organized with the Student Council (Fachschaft VWL).
Prof. Farzad Saidi presented his paper, “Two Centuries of Systemic Bank Runs” (joint work). The paper examines over 160 systemic bank runs across 184 countries from 1800 to 2023, as there is little direct evidence of bank runs and their macroeconomic ramifications in current literature. The key takeaway is that the unconditional probability of a bank run is approximately 2%, whereas the conditional probability of a bank run given a banking crisis is around 50%. Following a systemic bank run, severe output losses occur: a 9% drop in GDP and a close to 30% drop in credit.
Prof. Benjamin Born presented his paper, “A Temporary VAT Cut as Unconventional Fiscal Policy“ (joint work). This paper uses the shortly announced VAT cut during the Covid-19 pandemic in Germany to study its effect on consumption. In particular, the research question they investigate is: Was consumption spending stimulated? Using ex-ante and ex-post approaches, the authors found that consumption spending increased significantly, especially on durable goods, and they detected direct evidence of intertemporal substitution. This stimulative effect was driven by price-sensitive, financially less well-off, and younger households.
The evening concluded with a get-together in the Faculty Lounge, which provided a relaxed setting for further conversations and networking.
We would like to thank Prof. Farzad Saidi and Prof. Benjamin Born for their enriching presentations, as well as for taking the time to discuss them afterwards.
