Assessing Temporary Product-Specific Subsidies: A Time Series Intervention Analysis

45 Pages Posted: 17 May 2018

See all articles by David Leuwer

David Leuwer

University of Leipzig

Bernd Süssmuth

University of Leipzig; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 21, 2018

Abstract

We propose an analytical framework based on the Kalman Filter to quantify central distortionary effects of product-specific subsidies. In our application, we use time series of foreign and domestic order book levels during and after the temporary installation of a “cash for clunkers” subsidy by the German government in 2009 to assess implied disruptions in the German automobile sector and eleven competing industries of the German manufacturing sector. We find stimulus-effects to be rather mild, some evidence of intertemporal program reversal, and consumers’ windfall gains to clearly come at the expense of other industries.

Keywords: automobile industry, regime changes, counterfactual analysis

JEL Classification: E320, E620, L620, C320

Suggested Citation

Leuwer, David and Süssmuth, Bernd, Assessing Temporary Product-Specific Subsidies: A Time Series Intervention Analysis (March 21, 2018). CESifo Working Paper Series No. 6946, Available at SSRN: https://ssrn.com/abstract=3179947

David Leuwer

University of Leipzig ( email )

Marschnerstrasse 31
D-04109 Leipzig, 04109
Germany

Bernd Süssmuth (Contact Author)

University of Leipzig ( email )

IEW Institute for Empirical Research in Economics
Grimmaische Str. 12
Leipzig, D-04109
Germany
+49 341 97 33782 (Phone)
+49 341 97 33789 (Fax)

HOME PAGE: http://www.wifa.uni-leipzig.de/iew/professur-oekonometrie/team/prof-dr-bernd-suessmuth.html

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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