19.04.2018 • 7/2018
Joint Economic Forecast Spring 2018: Germany’s Economic Experts Raise Forecast Slightly
Berlin, 19 April – Germany’s leading economic experts raised their forecasts for 2018 and 2019 slightly in their Spring Joint Economic Forecast released on Thursday in Berlin. They now expect economic growth of 2.2 percent for this year and 2.0 percent for 2019, versus 2.0 percent and 1.8 percent respectively in their autumn forecast. “The German economy is still booming, but the air is getting thinner as unused capacities are shrinking“, notes Timo Wollmershaeuser, ifo Head of Economic Forecasting. Commenting on the new German government’s economic policy, he adds: “It is precisely when the government’s coffers are full that fiscal policy should reflect the implications of its actions for overall economic stability and the sustainability of public finances. The extension of statutory pension benefits outlined in the coalition agreement runs counter to the idea of sustainability.”
Oliver Holtemöller
Read press release
Zu den rentenpolitischen Plänen im Koalitionsvertrag 2018 von CDU, CSU und SPD: Konsequenzen, Finanzierungsoptionen und Reformbedarf
Oliver Holtemöller, Christoph Schult, Götz Zeddies
Abstract
In the coalition agreement from February 7, 2018, the new German federal government drafts its public pension policy, which has to be evaluated against the background of demographic dynamics in Germany. From the year 2020 onwards, the age structure of the German population will change significantly. In this paper, the consequences of public pensions related policy measures from the coalition agreement for the German public pension insurance are illustrated using a simulation model. In the long run, the intended extensions of benefits would lead to an increase in the contribution rate to the German public pension insurance of about two and a half percentage points. Referring to pension systems of other countries, we discuss measures in order to limit this increase in the contribution rate.
Read article
Bottom-up or Direct? Forecasting German GDP in a Data-rich Environment
Katja Heinisch, Rolf Scheufele
Empirical Economics,
No. 2,
2018
Abstract
In this paper, we investigate whether there are benefits in disaggregating GDP into its components when nowcasting GDP. To answer this question, we conduct a realistic out-of-sample experiment that deals with the most prominent problems in short-term forecasting: mixed frequencies, ragged-edge data, asynchronous data releases and a large set of potential information. We compare a direct leading indicator-based GDP forecast with two bottom-up procedures—that is, forecasting GDP components from the production side or from the demand side. Generally, we find that the direct forecast performs relatively well. Among the disaggregated procedures, the production side seems to be better suited than the demand side to form a disaggregated GDP nowcast.
Read article
On Mitra's Sufficient Condition for Topological Chaos: Seventeen Years Later
Liuchun Deng, M. Ali Khan
Economics Letters,
March
2018
Abstract
This letter reports an easy extension of Mitra’s “easily verifiable” sufficient condition for topological chaos in unimodal maps, and offers its application to reduced-form representations of two economic models that have figured prominently in the recent literature in economic dynamics: the check- and the M-map pertaining to the 2-sector Robinson–Solow–Srinivasan (RSS) and Matsuyama models respectively. A consideration of the iterates of these maps establishes the complementarity of the useful 2001 condition with the 1982 (LMPY) theorem of Li–Misiurewicz–Pianigiani–Yorke when supplemented by a geometric construction elaborated in Khan–Piazza (2011).
Read article
On Growing through Cycles: Matsuyama's M-map and Li-Yorke Chaos
Liuchun Deng, M. Ali Khan
Journal of Mathematical Economics,
January
2018
Abstract
Recent work of Gardini et al. (2008), building on earlier work of Mitra (2001) and Mukherji (2005), considers the so-called M-map that generates a dynamical system underlying Matsuyama’s (1999) endogenous growth model. We offer proofs of the fact that there do not exist 3- or 5-period cycles in the M-map, and an example (a numerical proof) of the existence of a 7-period cycle. We use the latter, and a construction in Khan and Piazza (2011), to identify a range of parameter values of the M-map that guarantee the existence of cycles of all periods, except 3 and 5. Our argumentation relies on, and reports, the first four iterations of the M-map that may have independent interest.
Read article
The Effects of Fiscal Policy in an Estimated DSGE Model – The Case of the German Stimulus Packages During the Great Recession
Andrej Drygalla, Oliver Holtemöller, Konstantin Kiesel
Abstract
In this paper, we analyse the effects of the stimulus packages adopted by the German government during the Great Recession. We employ a standard medium-scale dynamic stochastic general equilibrium (DSGE) model extended by non-optimising households and a detailed fiscal sector. In particular, the dynamics of spending and revenue variables are modeled as feedback rules with respect to the cyclical component of output. Based on the estimated rules, fiscal shocks are identified. According to the results, fiscal policy, in particular public consumption, investment, transfers and changes in labour tax rates including social security contributions prevented a sharper and prolonged decline of German output at the beginning of the Great Recession, suggesting a timely response of fiscal policy. The overall effects, however, are small when compared to other domestic and international shocks that contributed to the economic downturn. Our overall findings are not sensitive to the allowance of fiscal foresight.
Read article
The Macroeconomic Development of the Soviet Occupied Zone/GDR (1949 until 1989) – a Balance
Udo Ludwig
Günther Heydemann, Karl-Heinz Paqué (Hrsg.): Planwirtschaft – Privatisierung – Marktwirtschaft. Wirtschaftsordnung und -entwicklung in der SBZ/DDR und den neuen Bundesländern 1945 - 1994. Vandenhoeck & Ruprecht,
2017
Abstract
Applying the growth accounting model the impact of labor and capital inputs as well as of the technological progress on GDP growth in different historical periods oft Eastern Germany is estimated. The main finding is the failure of the central planning model to modernize the economy. The total factor productivity dominated the economic growth only during the economic reforms in the second halve of the 60ies.
Read article
14.12.2017 • 39/2017
Cyclical upswing in Germany and in the world
At the turn of the year, the cyclical upswing in Germany continues. Gross domestic product is expected to increase by 2.2% in 2017, and because this year has seen significantly fewer working days than before, the rate of change amounts, adjusted for calendar effects, to even 2.5%. “The upswing is broad-based”, says Oliver Holtemöller, head of the Department Macroeconomics and IWH vice president. “For quite a long time now, significant increases in employment have been driving private incomes, consumption and housing construction. The latter was, in addition, stimulated by low interest rates.” Currently, German exports are benefiting from the vivid international economy. Not least since monetary policy in the euro area remains expansionary for the time being, we expect the upturn to continue in 2018 and production to increase again by 2.2%. Consumer price inflation is, with 1.7%, still moderate in both 2017 and 2018. Although domestic price pressures are on the rise, the effects of the energy price increase in 2017 expire in 2018, and the appreciation of the euro in the summer of 2017 will dampen price dynamics.
Oliver Holtemöller
Read press release
28.09.2017 • 35/2017
Joint Economic Forecast—Autumn 2017: Upturn Remains Robust—Amid Mounting Tensions
The German economic upturn has gained both in terms of strength and breadth. In addition to consumer spending, external trade and investments are now also contributing to economic expansion. These are the conclusions drawn by the economic research institutes in their autumn report for the German federal government. Whereas the very high economic momentum in the first half of the current year will slow slightly, expansion of economic output this year and next will exceed production capacity growth. As a result, overall capacity utilization will increase, with economic output exceeding potential output. Gross Domestic Product is likely to grow by 1.9 percent this year and by 2 percent in 2018 (calendar-adjusted: 2.2 and 2.1 percent, respectively).
Oliver Holtemöller
Read press release
Works Councils and Other Plant-specific Forms of Employee Participation – Substitutes or Complements?
Stefan Ertelt, Boris Hirsch, Claus Schnabel
Industrielle Beziehungen,
No. 3,
2017
Abstract
Using data from the IAB Establishment Panel (2004-2013), this paper analyses the incidence, development and interdependence of works councils and other, typically managementinitiated forms of employee participation (such as round tables) in Germany. In the private sector, the incidence of works councils and other forms of participation is similar, but in very few establishments both bodies exist simultaneously. Econometric analyses based on recursive probit models indicate that partly different factors explain the existence of works councils and other forms of participation. Both bodies correlate negatively with respect to their incidence, foundation, and dissolution. This suggests that there exists a predominantly substitutive relationship between works councils and other forms of employee participation.
Read article