Research

How do soccer clubs react to positive income shocks? Exploiting quasi-random variation induced by penalty shootouts in Verbandspokal finals, a German amateur tournament, we find that clubs receiving a positive income shock are unable to improve their final league position in the following years. Even more surprising, these teams start to significantly underperform three years and onwards after the income shock. We observe an associated increase in insolvency proceedings, indicating financial struggles after the Verbandspokal final. We identify a causal link to longer managerial tenure, which suggests the emergence of a bias in the decision-making process regarding whether or not to appoint a new team manager. The long-run decline in club performance also carries political externalities, as the majority party in the municipal council of the club's municipality significantly underperforms in subsequent elections. 

Transportation restrictions on rivers due to high or low water level events lead to disruptions of supply chains, which are exogenous to the current state of the economy. This paper proposes a novel method to exploit and quantify these surprising transportation restrictions which lead to regional supply chain disruptions and applies it to the river Rhine. A surprising decrease of the Rhine’s shipping capacity leads to a short-lived but significant decrease in economic activity, not only in the bordering federal states but entire Germany. This effect is more pronounced in industries and regions that rely more heavily on the Rhine and the goods shipped on it. Also, we observe a substitution pattern with respect to the countries of origin of these goods following the unanticipated supply chain disruptions.