Brigitte Hochmuth

Institute of Macroeconomics and Econometrics
Kaiserplatz 7-953113 Bonn               
E-Mail: brigitte.hochmuth[at]

About me

I am currently serving as a Substitute Professor of Macroeconomics at the University of Bonn, while on leave from my position at the University of Vienna. Furthermore, I am a CEPR Research Affiliate and a Fellow at the Institute for Advanced Studies (IHS) Vienna.

In my research,  I use micro data for macro models to answer questions on the (international) macro effects of labor market policies and the interaction of credit and labor markets. 

Click here for my CV.  [Download].

Office hours: Please make an appointment via e-mail!


Current Research Projects

Dwyer Ramsey Prize 2020 by the Society of Nonlinear Dynamics  and Econometrics (SNDE)

Abstract: I document the heterogeneous effects of credit crunches on the labor market by firm age and over time. During the Great Financial Crisis (GFC), a credit supply shock caused young firms to reduce employment significantly more than old firms because the housing bust in 2006 led to a decline in young firms’ collateralizable housing assets, which restricted their borrowing capacity. To disentangle the relative contribution of the credit supply and net worth channels, I propose a financial frictions model with an explicit firm age structure. A simultaneous credit crunch and a decline in young firms’ housing net worth can reconcile the model with my empirical results. While old firms shift to equity financing, young firms depend on debt financing and cut labor demand. As young firms disproportionately account for aggregate job growth, my findings explain the sluggish labor market recovery after the GFC.

Labor Market Reforms in Open Economies: Current Account Dynamics and Consumer Heterogeneity (Revise and Resubmit at AEJ: Macro)
(joint with Stéphane Moyen, Felix Schröter, and Nikolai Stähler).   

[Download Paper

Abstract: This paper establishes a link between labor market reforms and an increase in the reforming country’s net foreign asset position via a precautionary savings channel. Using a heterogeneous agent model of a small open economy with labor market frictions, we evaluate the current account effects of a major German unemployment benefit reform. We show that accounting for precautionary savings is qualitatively and quantitatively important for current account dynamics. Furthermore, welfare gains and losses are distributed unequally among agents. Compared to a closed economy, the reform is more detrimental in the short run and more beneficial in the long run.

Incomplete Insurance and Open-Economy Spillovers of Labor Market Reforms
(joint with Christian Merkl and Heiko Stüber). 

[Download Paper] 

Abstract: This paper shows that less generous unemployment benefits in one country may generate substantial negative long-run consumption spillovers to non-reforming countries under incomplete consumption insurance. While lower benefits reduce unemployment in the reforming country, employed workers increase their precautionary savings to compensate for reduced government-provided insurance. A portion of these additional savings flows to the non-reforming country and depresses long-term consumption due to the negative net foreign asset position. To discipline our quantitative model, we estimate the increase of Germany’s tradable sector in the aftermath of the Hartz unemployment insurance reform based on firm-level data. Our quantitative model matches a significant fraction of various macroeconomic trends after the reform, namely Germany’s persistent increase of aggregate savings and net foreign assets, the increase of net exports, the real exchange rate depreciation within the Eurozone, and the decline in unemployment. Conversely, Germany’s wage moderation before the reform appears to be unrelated to most of these phenomena.

Heterogeneous Risk Preferences, Entrepreneurship, and Wealth Inequality
(joint with Monika Merz and Fabian Prettenthaler)


Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation (with Britta Kohlbrecher, Christian Merkl, and Hermann Gartner), Journal of Economic Dynamics and Control Vol. 127, June 2021, 104114. 

[Published Version], Latest Working Paper Versions:  [IHS WP]  [Cesifo WP]
Related Policy Articles & Media Coverage:  [IZA Newsroom], [IZA Newsroom (DE)][Makronom]

Abstract: This paper proposes a new approach to evaluate the macroeconomic effects of the ‘Hartz IV’ reform, which reduced the generosity of long-term unemployment benefits. We propose a model with different unemployment durations, where the reform initiates both a partial effect and an equilibrium effect. We estimate the relative importance of these two effects and the size of the partial effect based on the IAB Job Vacancy Survey. Our approach does not hinge on an external source for the decline in the replacement rate for long-term unemployed. We find that Hartz IV was a major driver for the decline of Germany’s steady state unemployment and that partial and equilibrium effect were nearly of equal importance. In addition, we provide direct empirical evidence on labor selection, one potential dimension of recruiting intensity. 

Counteracting Unemployment in Crises: Non-Linear Effects of Short-Time Work Policy (joint with Britta Gehrke)  The Scandinavian Journal of Economics, Vol. 123, Issue 1, January 2021,  pp, 144 - 183

[Published Version]     [IZA Discussion Paper]
Related Policy Articles & Media Coverage:
VoxEU Article, in German: [ifo Schnelldienst]  [WirtschaftsWoche]  [Zeitschrift f. Wirtschaftspolitik]

Abstract: Short-time work is a labor market policy that subsidizes working time reductions among firms in financial difficulty to prevent layoffs. Many OECD countries have used this policy in the Great Recession. This paper shows that the effects of short-time work are strongly time dependent and nonlinear over the business cycle. It may save up to 0.87 jobs per short-time worker in deep economic crises. In expansions, the effects are smaller and may turn negative. We disentangle discretionary short-time work from automatic stabilization in German data using smooth transition VARs.

In the Media


At the University of Bonn, I am currently teaching 

Summer term 2024:

Winter term 2023/24:

At the University of Vienna, I am teaching 

Furthermore, my teaching experience during my Ph.D. studies at the University of Erlangen-Nuremberg covered the following courses: