Research

Trading budget deficits for public investment: Optimal deficit rules for present-biased governments

Bergmann, T. Moretti, N., published in European Journal of Political Economy, 2026

In this paper, we characterize the optimal deficit-rule for a present-biased government, accounting for the distortion of long-term investment it induces. We analyze the effect of a shock to the productivity of investment on the optimal deficit-cap. Furthermore, we compare the welfare outcome of a balanced budget rule, the absence of any deficit rule, and a benchmark deficit rule.

Fiscal Policy and Energy Price Shocks

Blanz, A., Eydam, U., Heinemann, M., Kalkuhl, M., Moretti, N., published in Energy Policy, 2026

In this paper, we analyse the effect of different fiscal policy measures and financing measures in response to an energy price shock in a DSGE model with heterogeneous households differing with respect to their energy consumption and savings capacity.

Rechtfertigt Klimapolitik eine Erhöhung der Verschuldung? Plädoyer für eine grün-goldene Regel

Edenhofer, O., Eydam, U., Heinemann, M., Kalkuhl, M., Moretti, N., published in Perspektiven der Wirtschaftspolitik, 2025

Dieser Artikel präsentiert eine Komponente einer modifizierten Investitionsregel für die Klimapolitik, die in Anlehnung an die goldene Regel der Finanzwissenschaft als „grün-goldene Regel“ bezeichnet wird. Die Höhe der Neuverschuldung von den vermiedenen Klimaschäden abhängig gemacht. Wir zeigen beispielhaft, dass bei Grenzschäden (Social Costs of Carbon) von 200 Euro pro Tonne eine zusätzliche Neuverschuldung von insgesamt 161 Milliarden Euro bis 2030 möglich wird, sofern die Emissionsziele des Klimaschutzgesetzes 2020-2030 erreicht werden.

Media: Der Spiegel (03/2025), Frankfurter Rundschau (08/2025)

Power to which people? Energiegerechtigkeit und ownership-Strukturen in Energiegenossenschaften

Rieder, Q., Veit, K., Moretti, N., Peters, L., Li, C., published in Umweltgerechtigkeit und sozialökologische Transformation, 2023

In this article, we study how energy cooperatives foster a just transition in the energy sector based on interviews conducted with members of two cooperatives.

Interaction effects between dynamic hybrid products and traditional deferred annuities in the German life insurance market

Moretti, N., Bartels, J., published in Financial Markets and Portfolio Management, 2021

In this paper, we study interaction effects between dynamic hybrid products and traditional deferred annuity contracts that are sold by the same insurance company. We build a model including a detailed representation of the profit participation mechanism and analyse it using a Monte Carlo simulation.

A Green-Golden Rule for Climate Policy

Edenhofer, O.; Eydam, U.; Heinemann, M.; Kalkuhl, M.; Moretti, N., published in ‘SSRN’, 2025

We elaborate a fiscal rule that conditions the admissible deficit for a government on the observed reduction in carbon emissions based on a welfare economic framework. We call this adaptation of the classical “golden rule of public finance” to the climate context “green-golden rule”. The conceptualization of climate-investment as reduction in carbon emissions has a key advantage: Carbon emissions are measurable in t/CO2 and homogeneous with returns given by the Social Cost of Carbon. This makes it possible to overcome the major criticisms to the golden rule, namely the difficulty to assess the returns on public investment and the vagueness of the definition of invesmtent and the connected “creative accounting critique”. We quantify a quantity version and a price version of the rule for the case of Germany.

Private Investment, Durable Public Goods, and Intergenerational Altruism

Ongoing

We design a survey experiment to estimate individual intergenerational altruism based on a model of quasi-exponential discounting and convex time budgets. We investigate, whether implicit altruism differs systematically between private investment decisions and decisions on durable public goods. (With Matthias Kalkuhl, Maximilian Kellner, Andreas Peichl, Karolina Rütten, and Lisa Windsteiger)

Offsets with Endogenous Government Policy

Ongoing

We show that carbon offset mechanisms systematically crowd out domestic renewable energy subsidies through rational government policy responses. Even absent market failures, full additionality never holds — and depending on supply curve curvature, crowding out can be complete or even negative. (With Sreoshi Banerjee, Esteban Munoz-Sobrado, and Lennart Stern)

Income inequality, bequest constraints, and long-term public investment

Ongoing

We investigate the effect of bequest constraints on private discount rates in a model where households display (dynastic) intergenerational altruism but face uncertainty about their children’s income. Resulting differences in private discount rates are not caused by fundamental preference parameters and therefore policy-amenable. We explore the effect of redistributive policies on the provision of long-term public goods in a simple voting model. (With Matthias Kalkuhl and Maximilian Kellner)