25 Years IWH

25 Jahre IWH
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German Upswing is Slowing Down

In summer 2018, the world economy is still rather strong. Dynamics in the euro area, however, have declined markedly, and the cyclical upswing in Germany has almost stalled, due to weaker exports. Gross domestic product will, according to this IWH forecast, expand by 1.7% in 2018 and by 1.6% in 2019.

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Figure It Out!

The impact of an unexpected policy change

20
percent

On January 15th, 2015, the Swiss Franc appreciated by about 20%, when a cap to the exchange rate was removed.

95
percent
The negative stock market reaction to this shock correlates by more than 95% with Google query statistics related to terms like "Swiss National Bank", revealing substantial uncertainty about the policy.
Read more: Did the Swiss Exchange Rate Shock Shock the Market?

Press Releases

22.06.2018 • 15/2018

Presseeinladung zum Workshop: „Abgehängte Regionen – Probleme und Gegenstrategien“ am 28. Juni 2018 in Halle (Saale)

Abstract

Knapp drei Jahrzehnte nach der deutschen Vereinigung unterscheiden sich die Lebensverhältnisse innerhalb Deutschlands stark, auch zwischen Stadt und Land. Wie Politik, Wirtschaft und Gesellschaft darauf reagieren sollten, diskutiert eine Veranstaltung der Expertenplattform „Demographischer Wandel in Sachsen-Anhalt“ in Zusammenarbeit mit dem Leibniz-Institut für Wirtschaftsforschung Halle (IWH).

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14.06.2018 • 14/2018

Current economic outlook: German upswing is slowing down

Professor Dr Oliver Holtemöller
Abstract

In summer 2018, the world economy is still rather strong. Dynamics in the euro area, however, have declined markedly, and the cyclical upswing in Germany has almost stalled, due to weaker exports. “Gross domestic product will, according to this forecast, expand by 1.7% in 2018 and by 1.6% in 2019. Growth in East Germany will be about as strong as in Germany as a whole”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at IWH.

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28.05.2018 • 13/2018

Einladung zum Workshop „Europäische Wirtschaft stärken – Forschungsergebnisse aus dem Leibniz-Forschungsverbund ‚Krisen einer globalisierten Welt‘“

Professor Dr Oliver Holtemöller
Abstract

Im Rahmen des Leibniz-Forschungsverbunds „Krisen einer globalisierten Welt“ organisiert das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) gemeinsam mit dem ZEW, Zentrum für europäische Wirtschaftsforschung sowie dem Bundesministerium für Wirtschaft und Energie (BMWi) einen Workshop, der sich den Fragen zur Zukunft des internationalen Handels und der europäischen Integration widmet.

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25.05.2018 • 12/2018

The resistance of employers against works councils

Professor Dr Steffen Müller
Abstract

Germany votes. However, this time it’s not about the politicians – instead it’s about the works councils. It’s certainly worthwhile: Many studies have shown that works councils all in all have a positive impact on productivity, wages and profits. Despite this, employers are sometimes very resistant to the idea of staff involvement in company decision-making. A common argument is that such participation limits managerial freedom and that employers are willing to sacrifice the benefits of staff participation in return for greater room for manoeuvre. Steffen Müller from the Halle Institute for Economic Research Halle (IWH) – Member of the Leibniz Association now provides an alternative economic justification for employer resistance: Employer associations are dominated by small and medium-sized enterprises, and in these works councils – in contrast to large firms – often produce no positive economic benefits.

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Facts and Figures

New Regulatory Framework in Europe

Figure_1_European_Banking_Union.jpg

This figure shows the different pillars that form the basis of the new regulatory framework in Europe. The Single Rulebook applies to all 28 member states. The three pillars of the European Banking Union are obligatory for Euro Area countries and voluntary for the remaining EU member states. Source: Koetter, Michael; Krause, Thomas; Tonzer, Lena (2017): Delay determinants of European Banking Union implementation. IWH Discussion Papers 24/2017, Halle Institute for Economic Research (IWH).

Share of Zombie Firms 2010-2014 by Country

Figure_2_Share_of_Zombie_Firms.jpg

The graph shows the percentage share of firms that have been classified as zombies in a given year and country. Zombie firms are firms, that for at least two consecutive years have negative returns, negative investment, and debt servicing capacity (EBITDA/ financial debt) below 5 %. Source: Koetter, Michael; Setzer, Ralph; Storz, Manuela; Westphal, Andreas (2017): Do we want these two to tango? On zombie firms and stressed banks in Europe. IWH Discussion Papers 13/2017, Halle Institute for Economic Research (IWH).

Comparison of EFN Forecasts with Alternative Forecasts

Figure_3_EFN_Report_Winter2017-Economic_Outlook.jpg

EU: European Commission, Economic Forecast, November 2017; IMF: World Economic Outlook, October 2017, ECB: December 2017 staff macroeconomic projections. OECD: Economic Outlook, November 2017; Consensus: Consensus Economics, Consensus Forecasts, December 2017. Source: EFN-European Forecasting Network (2017): EFN Report: Economic Outlook for the Euro Area in 2018 and 2019.

Euro Area Inflation Dynamics and Possible Drivers (a)

Figure_4a_Inflation_Dynamics.jpg

This figure (a) shows headline inflation rates in the Euro area and in ten member countries of the European Monetary Union (EMU). The possible inflation drivers may all have contributed to the low inflation rate in recent years. The series of survey- and market-based inflation expectations were obtained from Consensus Economics, Thomson Reuters and own calculations. For the remaining data sources it is referred to the data and estimation section. Source: Dany-Knedlik, Geraldine; Holtemöller, Oliver (2017): Inflation dynamics during the financial crisis in Europe: Cross-sectional identification of long-run inflation expectations. IWH Discussion Papers 10/2017, Halle Institute for Economic Research (IWH).

Euro Area Inflation Dynamics and Possible Drivers (b)

Figure_4b_Inflation_Dynamics.jpg

This figure (b) shows unemployment rates in the Euro area and in ten member countries of the European Monetary Union (EMU). The possible inflation drivers may all have contributed to the low inflation rate in recent years. The series of survey- and market-based inflation expectations were obtained from Consensus Economics, Thomson Reuters and own calculations. For the remaining data sources it is referred to the data and estimation section. Source: Dany-Knedlik, Geraldine; Holtemöller, Oliver (2017): Inflation dynamics during the financial crisis in Europe: Cross-sectional identification of long-run inflation expectations. IWH Discussion Papers 10/2017, Halle Institute for Economic Research (IWH).

Bank Levies Paid by German Banks

Figure_5_Bank_Levies.jpg

This figure shows the payments of the bank levy (in million euros) by German banks for the years 2011-2015, broken down by banking group. During the years 2011-2014, banks had to contribute to the national restructuring fund as specified in the Restructuring Fund Act. In 2015, banks contributions were for the first time calculated as specified in the Banking Resolution and Restructuring Directive. Source of Figure: Deutscher Bundestag Drucksache 18/5993, BB8/5993he 18 5 December 2015. Source: Buch, Claudia; Tonzer, Lena; Weigert, Benjamin (2017): Assessing the effects of regulatory bank levies. VOX CEPR's Policy Portal: Research-based policy analysis and commentary from leading economists.

Aggregated Foreign Funding for Brazilian Banks (2007-2010)

Figure_6_Aggregated_Foreign_Funding_Brazil.jpg

This figure shows the development of aggregated foreign funding for Brazilian banks between January 2007 and December 2010. The vertical line is set at September 2008, the month when the collapse of Lehman Brothers triggered a freeze in global interbank markets. Foreign funding is aggregated from the bank-level data in the baseline sample. The variable is reported in real 2013 US$ millions. Source: Noth, Felix; Ossandon Busch, Matias (2017): Banking globalization, local lending, and labor market effects: Micro-level evidence from Brazil. IWH Discussion Papers 7/2017, Halle Institute for Economic Research (IWH).

Unemployment Rates by Nationality (2014)

Figure_7a_Unemployment_Rates_by_Nationality_mod.jpg

The unemployment rate of EU nationals in most countries is slightly higher than that of domestic nationals; these rates are almost perfectly correlated for all member states. As the figure displays, the unemployment rate of citizens from non-EU member states is significantly higher than that of domestic nationals in almost all countries; the dispersion of the rates is also significantly greater. Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Labour Market Situation for Non-EU Foreigners in Relation to the Number of Applications for Asylum (2014)

Figure_7b_Labour_Market_Situation.jpg

In fact, there is a positive correlation between the number of applications for asylum in recent years and the difference in the unemployment rates of domestic nationals and of citizens from non-EU member states (as shown in the figure at hand). This indicates that the marginal costs of integrating refugees do indeed increase as the number of refugees grows. Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Employment Rates by Nationality and Gender (2014)

Figure_7c_Employment_Rates_Nationality_Gender.jpg

Large differences between nationals and foreigners from non-EU countries can also be observed when it comes to the employment rate. In most countries, the employment rate is considerably lower for non-EU citizens than for domestic nationals; this is the case especially for women, but it applies to men as well. While the employment rate of male non-EU foreigners increases at least somewhat with the employment rate of male domestic nationals, the employment rate of female non-EU foreigners is largely disconnected from the domestic rate (see figure above). Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Average Work Performance of Employees Based on Meaning of Task (2014)

Figure_8_Average_work_performance_corresponding_to_meaning_of_task.jpg

The figure demonstrates that the average number of responses differs between the three treatment groups "Original Meaning", "No Meaning" and "Alternative Meaning". It shows the average work performance of workers fulfilling the same task with the same reward but with different information about the usefulness or meaning of their work done before. Since some workers did not respond at first and only participated in the experiment as latecomers after they were sent further invitations, these were considered as a special group. Therefore, two different groups were created "Immediate" and "Pooled" and were considered separately. In essence, the additional "Pooled" group consists of latecomers grouped together with the employees that immediately participated in the experiment. Source: Chadi, Adrian; Jeworrek, Sabrina; Mertins, Vanessa (2016): When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions. Management Science 63(6): 1696-1707.

Current Publications

cover_applied-economics.jpg

Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures and Bankruptcies

Daniel Fackler Steffen Müller Jens Stegmaier

in: Applied Economics, forthcoming

Abstract

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.

read publication
cover_finance-research-letters.png

Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: Finance Research Letters, forthcoming

Abstract

We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.

read publication

Financial Literacy and Self-employment

Aida Ćumurović Walter Hyll

in: The Journal of Consumer Affairs, forthcoming

Abstract

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.

read publication
cover_international-journal-of-central-banking.jpg

Deleveraging and Consumer Credit Supply in the Wake of the 2008-2009 Financial Crisis

Reint E. Gropp J. Krainer E. Laderman

in: International Journal of Central Banking, forthcoming

read publication
cover_applied-economics-letters.jpg

For How Long Do IMF Forecasts of World Economic Growth Stay Up-to-date?

Katja Heinisch Axel Lindner

in: Applied Economics Letters, forthcoming

Abstract

This study analyses the performance of the International Monetary Fund (IMF) World Economic Outlook output forecasts for the world and for both the advanced economies and the emerging and developing economies. With a focus on the forecast for the current year and the next year, we examine the durability of IMF forecasts, looking at how much time has to pass so that IMF forecasts can be improved by using leading indicators with monthly updates. Using a real-time data set for GDP and for indicators, we find that some simple single-indicator forecasts on the basis of data that are available at higher frequency can significantly outperform the IMF forecasts as soon as the publication of the IMF’s Outlook is only a few months old. In particular, there is an obvious gain using leading indicators from January to March for the forecast of the current year.

read publication

Should Forecasters Use Real-time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence

Katja Heinisch Rolf Scheufele

in: German Economic Review, forthcoming

Abstract

In this paper, we investigate whether differences exist among forecasts using real‐time or latest‐available data to predict gross domestic product (GDP). We employ mixed‐frequency models and real‐time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real‐time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.

read publication
cover_review-of-financial-studies.png

Bank Response To Higher Capital Requirements: Evidence From A Quasi-natural Experiment

Reint E. Gropp Thomas Mosk Steven Ongena Carlo Wix

in: Review of Financial Studies, forthcoming

Abstract

We study the impact of higher capital requirements on banks’ balance sheets and its transmission to the real economy. The 2011 EBA capital exercise provides an almost ideal quasi-natural experiment, which allows us to identify the effect of higher capital requirements using a difference-in-differences matching estimator. We find that treated banks increase their capital ratios not by raising their levels of equity, but by reducing their credit supply. We also show that this reduction in credit supply results in lower firm-, investment-, and sales growth for firms which obtain a larger share of their bank credit from the treated banks.

read publication
cover_journal-of-banking-and-finance.jpg

Cross-border Transmission of Emergency Liquidity

Thomas Kick Michael Koetter Manuela Storz

in: Journal of Banking & Finance, forthcoming

Abstract

We show that emergency liquidity provision by the Federal Reserve transmitted to non-U.S. banking markets. Based on manually collected holding company structures, we identify banks in Germany with access to U.S. facilities. Using detailed interest rate data reported to the German central bank, we compare lending and borrowing rates of banks with and without such access. U.S. liquidity shocks cause a significant decrease in the short-term funding costs of the average German bank with access. This reduction is mitigated for banks with more vulnerable balance sheets prior to the inception of emergency liquidity. We also find a significant pass-through in terms of lower corporate credit rates charged for banks with the lowest pre-crisis leverage, US-dollar funding needs, and liquidity buffers. Spillover effects from U.S. emergency liquidity provision are generally confined to short-term rates.

read publication

How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina

Claudia Lambert Felix Noth U. Schuewer

in: Review of Finance, forthcoming

read publication

Size of Training Firms and Cumulated Long-Run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers

Steffen Müller Renate Neubäumer

in: International Journal of Manpower, forthcoming

read publication
cover_applied-economics.jpg

Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures and Bankruptcies

Daniel Fackler Steffen Müller Jens Stegmaier

in: Applied Economics, forthcoming

Abstract

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.

read publication
cover_finance-research-letters.png

Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: Finance Research Letters, forthcoming

Abstract

We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.

read publication

Financial Literacy and Self-employment

Aida Ćumurović Walter Hyll

in: The Journal of Consumer Affairs, forthcoming

Abstract

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.

read publication
cover_international-journal-of-central-banking.jpg

Deleveraging and Consumer Credit Supply in the Wake of the 2008-2009 Financial Crisis

Reint E. Gropp J. Krainer E. Laderman

in: International Journal of Central Banking, forthcoming

read publication
cover_applied-economics-letters.jpg

For How Long Do IMF Forecasts of World Economic Growth Stay Up-to-date?

Katja Heinisch Axel Lindner

in: Applied Economics Letters, forthcoming

Abstract

This study analyses the performance of the International Monetary Fund (IMF) World Economic Outlook output forecasts for the world and for both the advanced economies and the emerging and developing economies. With a focus on the forecast for the current year and the next year, we examine the durability of IMF forecasts, looking at how much time has to pass so that IMF forecasts can be improved by using leading indicators with monthly updates. Using a real-time data set for GDP and for indicators, we find that some simple single-indicator forecasts on the basis of data that are available at higher frequency can significantly outperform the IMF forecasts as soon as the publication of the IMF’s Outlook is only a few months old. In particular, there is an obvious gain using leading indicators from January to March for the forecast of the current year.

read publication

Should Forecasters Use Real-time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence

Katja Heinisch Rolf Scheufele

in: German Economic Review, forthcoming

Abstract

In this paper, we investigate whether differences exist among forecasts using real‐time or latest‐available data to predict gross domestic product (GDP). We employ mixed‐frequency models and real‐time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real‐time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.

read publication
cover_review-of-financial-studies.png

Bank Response To Higher Capital Requirements: Evidence From A Quasi-natural Experiment

Reint E. Gropp Thomas Mosk Steven Ongena Carlo Wix

in: Review of Financial Studies, forthcoming

Abstract

We study the impact of higher capital requirements on banks’ balance sheets and its transmission to the real economy. The 2011 EBA capital exercise provides an almost ideal quasi-natural experiment, which allows us to identify the effect of higher capital requirements using a difference-in-differences matching estimator. We find that treated banks increase their capital ratios not by raising their levels of equity, but by reducing their credit supply. We also show that this reduction in credit supply results in lower firm-, investment-, and sales growth for firms which obtain a larger share of their bank credit from the treated banks.

read publication
cover_journal-of-banking-and-finance.jpg

Cross-border Transmission of Emergency Liquidity

Thomas Kick Michael Koetter Manuela Storz

in: Journal of Banking & Finance, forthcoming

Abstract

We show that emergency liquidity provision by the Federal Reserve transmitted to non-U.S. banking markets. Based on manually collected holding company structures, we identify banks in Germany with access to U.S. facilities. Using detailed interest rate data reported to the German central bank, we compare lending and borrowing rates of banks with and without such access. U.S. liquidity shocks cause a significant decrease in the short-term funding costs of the average German bank with access. This reduction is mitigated for banks with more vulnerable balance sheets prior to the inception of emergency liquidity. We also find a significant pass-through in terms of lower corporate credit rates charged for banks with the lowest pre-crisis leverage, US-dollar funding needs, and liquidity buffers. Spillover effects from U.S. emergency liquidity provision are generally confined to short-term rates.

read publication

How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina

Claudia Lambert Felix Noth U. Schuewer

in: Review of Finance, forthcoming

read publication

Size of Training Firms and Cumulated Long-Run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers

Steffen Müller Renate Neubäumer

in: International Journal of Manpower, forthcoming

read publication

Media Centre

New Regulatory Framework in Europe

Figure_1_European_Banking_Union.jpg

This figure shows the different pillars that form the basis of the new regulatory framework in Europe. The Single Rulebook applies to all 28 member states. The three pillars of the European Banking Union are obligatory for Euro Area countries and voluntary for the remaining EU member states. Source: Koetter, Michael; Krause, Thomas; Tonzer, Lena (2017): Delay determinants of European Banking Union implementation. IWH Discussion Papers 24/2017, Halle Institute for Economic Research (IWH).

Share of Zombie Firms 2010-2014 by Country

Figure_2_Share_of_Zombie_Firms.jpg

The graph shows the percentage share of firms that have been classified as zombies in a given year and country. Zombie firms are firms, that for at least two consecutive years have negative returns, negative investment, and debt servicing capacity (EBITDA/ financial debt) below 5 %. Source: Koetter, Michael; Setzer, Ralph; Storz, Manuela; Westphal, Andreas (2017): Do we want these two to tango? On zombie firms and stressed banks in Europe. IWH Discussion Papers 13/2017, Halle Institute for Economic Research (IWH).

Comparison of EFN Forecasts with Alternative Forecasts

Figure_3_EFN_Report_Winter2017-Economic_Outlook.jpg

EU: European Commission, Economic Forecast, November 2017; IMF: World Economic Outlook, October 2017, ECB: December 2017 staff macroeconomic projections. OECD: Economic Outlook, November 2017; Consensus: Consensus Economics, Consensus Forecasts, December 2017. Source: EFN-European Forecasting Network (2017): EFN Report: Economic Outlook for the Euro Area in 2018 and 2019.

Euro Area Inflation Dynamics and Possible Drivers (a)

Figure_4a_Inflation_Dynamics.jpg

This figure (a) shows headline inflation rates in the Euro area and in ten member countries of the European Monetary Union (EMU). The possible inflation drivers may all have contributed to the low inflation rate in recent years. The series of survey- and market-based inflation expectations were obtained from Consensus Economics, Thomson Reuters and own calculations. For the remaining data sources it is referred to the data and estimation section. Source: Dany-Knedlik, Geraldine; Holtemöller, Oliver (2017): Inflation dynamics during the financial crisis in Europe: Cross-sectional identification of long-run inflation expectations. IWH Discussion Papers 10/2017, Halle Institute for Economic Research (IWH).

Euro Area Inflation Dynamics and Possible Drivers (b)

Figure_4b_Inflation_Dynamics.jpg

This figure (b) shows unemployment rates in the Euro area and in ten member countries of the European Monetary Union (EMU). The possible inflation drivers may all have contributed to the low inflation rate in recent years. The series of survey- and market-based inflation expectations were obtained from Consensus Economics, Thomson Reuters and own calculations. For the remaining data sources it is referred to the data and estimation section. Source: Dany-Knedlik, Geraldine; Holtemöller, Oliver (2017): Inflation dynamics during the financial crisis in Europe: Cross-sectional identification of long-run inflation expectations. IWH Discussion Papers 10/2017, Halle Institute for Economic Research (IWH).

Bank Levies Paid by German Banks

Figure_5_Bank_Levies.jpg

This figure shows the payments of the bank levy (in million euros) by German banks for the years 2011-2015, broken down by banking group. During the years 2011-2014, banks had to contribute to the national restructuring fund as specified in the Restructuring Fund Act. In 2015, banks contributions were for the first time calculated as specified in the Banking Resolution and Restructuring Directive. Source of Figure: Deutscher Bundestag Drucksache 18/5993, BB8/5993he 18 5 December 2015. Source: Buch, Claudia; Tonzer, Lena; Weigert, Benjamin (2017): Assessing the effects of regulatory bank levies. VOX CEPR's Policy Portal: Research-based policy analysis and commentary from leading economists.

Aggregated Foreign Funding for Brazilian Banks (2007-2010)

Figure_6_Aggregated_Foreign_Funding_Brazil.jpg

This figure shows the development of aggregated foreign funding for Brazilian banks between January 2007 and December 2010. The vertical line is set at September 2008, the month when the collapse of Lehman Brothers triggered a freeze in global interbank markets. Foreign funding is aggregated from the bank-level data in the baseline sample. The variable is reported in real 2013 US$ millions. Source: Noth, Felix; Ossandon Busch, Matias (2017): Banking globalization, local lending, and labor market effects: Micro-level evidence from Brazil. IWH Discussion Papers 7/2017, Halle Institute for Economic Research (IWH).

Unemployment Rates by Nationality (2014)

Figure_7a_Unemployment_Rates_by_Nationality_mod.jpg

The unemployment rate of EU nationals in most countries is slightly higher than that of domestic nationals; these rates are almost perfectly correlated for all member states. As the figure displays, the unemployment rate of citizens from non-EU member states is significantly higher than that of domestic nationals in almost all countries; the dispersion of the rates is also significantly greater. Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Labour Market Situation for Non-EU Foreigners in Relation to the Number of Applications for Asylum (2014)

Figure_7b_Labour_Market_Situation.jpg

In fact, there is a positive correlation between the number of applications for asylum in recent years and the difference in the unemployment rates of domestic nationals and of citizens from non-EU member states (as shown in the figure at hand). This indicates that the marginal costs of integrating refugees do indeed increase as the number of refugees grows. Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Employment Rates by Nationality and Gender (2014)

Figure_7c_Employment_Rates_Nationality_Gender.jpg

Large differences between nationals and foreigners from non-EU countries can also be observed when it comes to the employment rate. In most countries, the employment rate is considerably lower for non-EU citizens than for domestic nationals; this is the case especially for women, but it applies to men as well. While the employment rate of male non-EU foreigners increases at least somewhat with the employment rate of male domestic nationals, the employment rate of female non-EU foreigners is largely disconnected from the domestic rate (see figure above). Source: Altemeyer-Bartscher, Martin; Holtemöller, Oliver; Lindner, Axel; Schmalzbauer, Andreas; Zeddies, Götz (2016): On the Distribution of Refugees in the EU. In: Intereconomics, Volume 51, July/August 2016, Number 4, pp. 220-228.

Average Work Performance of Employees Based on Meaning of Task (2014)

Figure_8_Average_work_performance_corresponding_to_meaning_of_task.jpg

The figure demonstrates that the average number of responses differs between the three treatment groups "Original Meaning", "No Meaning" and "Alternative Meaning". It shows the average work performance of workers fulfilling the same task with the same reward but with different information about the usefulness or meaning of their work done before. Since some workers did not respond at first and only participated in the experiment as latecomers after they were sent further invitations, these were considered as a special group. Therefore, two different groups were created "Immediate" and "Pooled" and were considered separately. In essence, the additional "Pooled" group consists of latecomers grouped together with the employees that immediately participated in the experiment. Source: Chadi, Adrian; Jeworrek, Sabrina; Mertins, Vanessa (2016): When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions. Management Science 63(6): 1696-1707.

cover_applied-economics.jpg

Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures and Bankruptcies

Daniel Fackler Steffen Müller Jens Stegmaier

in: Applied Economics, forthcoming

Abstract

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.

read publication
cover_finance-research-letters.png

Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: Finance Research Letters, forthcoming

Abstract

We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.

read publication

Financial Literacy and Self-employment

Aida Ćumurović Walter Hyll

in: The Journal of Consumer Affairs, forthcoming

Abstract

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.

read publication
cover_international-journal-of-central-banking.jpg

Deleveraging and Consumer Credit Supply in the Wake of the 2008-2009 Financial Crisis

Reint E. Gropp J. Krainer E. Laderman

in: International Journal of Central Banking, forthcoming

read publication
cover_applied-economics-letters.jpg

For How Long Do IMF Forecasts of World Economic Growth Stay Up-to-date?

Katja Heinisch Axel Lindner

in: Applied Economics Letters, forthcoming

Abstract

This study analyses the performance of the International Monetary Fund (IMF) World Economic Outlook output forecasts for the world and for both the advanced economies and the emerging and developing economies. With a focus on the forecast for the current year and the next year, we examine the durability of IMF forecasts, looking at how much time has to pass so that IMF forecasts can be improved by using leading indicators with monthly updates. Using a real-time data set for GDP and for indicators, we find that some simple single-indicator forecasts on the basis of data that are available at higher frequency can significantly outperform the IMF forecasts as soon as the publication of the IMF’s Outlook is only a few months old. In particular, there is an obvious gain using leading indicators from January to March for the forecast of the current year.

read publication

Should Forecasters Use Real-time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence

Katja Heinisch Rolf Scheufele

in: German Economic Review, forthcoming

Abstract

In this paper, we investigate whether differences exist among forecasts using real‐time or latest‐available data to predict gross domestic product (GDP). We employ mixed‐frequency models and real‐time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real‐time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.

read publication
cover_review-of-financial-studies.png

Bank Response To Higher Capital Requirements: Evidence From A Quasi-natural Experiment

Reint E. Gropp Thomas Mosk Steven Ongena Carlo Wix

in: Review of Financial Studies, forthcoming

Abstract

We study the impact of higher capital requirements on banks’ balance sheets and its transmission to the real economy. The 2011 EBA capital exercise provides an almost ideal quasi-natural experiment, which allows us to identify the effect of higher capital requirements using a difference-in-differences matching estimator. We find that treated banks increase their capital ratios not by raising their levels of equity, but by reducing their credit supply. We also show that this reduction in credit supply results in lower firm-, investment-, and sales growth for firms which obtain a larger share of their bank credit from the treated banks.

read publication
cover_journal-of-banking-and-finance.jpg

Cross-border Transmission of Emergency Liquidity

Thomas Kick Michael Koetter Manuela Storz

in: Journal of Banking & Finance, forthcoming

Abstract

We show that emergency liquidity provision by the Federal Reserve transmitted to non-U.S. banking markets. Based on manually collected holding company structures, we identify banks in Germany with access to U.S. facilities. Using detailed interest rate data reported to the German central bank, we compare lending and borrowing rates of banks with and without such access. U.S. liquidity shocks cause a significant decrease in the short-term funding costs of the average German bank with access. This reduction is mitigated for banks with more vulnerable balance sheets prior to the inception of emergency liquidity. We also find a significant pass-through in terms of lower corporate credit rates charged for banks with the lowest pre-crisis leverage, US-dollar funding needs, and liquidity buffers. Spillover effects from U.S. emergency liquidity provision are generally confined to short-term rates.

read publication

How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina

Claudia Lambert Felix Noth U. Schuewer

in: Review of Finance, forthcoming

read publication

Size of Training Firms and Cumulated Long-Run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers

Steffen Müller Renate Neubäumer

in: International Journal of Manpower, forthcoming

read publication
cover_applied-economics.jpg

Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures and Bankruptcies

Daniel Fackler Steffen Müller Jens Stegmaier

in: Applied Economics, forthcoming

Abstract

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.

read publication
cover_finance-research-letters.png

Badly Hurt? Natural Disasters and Direct Firm Effects

Felix Noth Oliver Rehbein

in: Finance Research Letters, forthcoming

Abstract

We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.

read publication

Financial Literacy and Self-employment

Aida Ćumurović Walter Hyll

in: The Journal of Consumer Affairs, forthcoming

Abstract

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.

read publication
cover_international-journal-of-central-banking.jpg

Deleveraging and Consumer Credit Supply in the Wake of the 2008-2009 Financial Crisis

Reint E. Gropp J. Krainer E. Laderman

in: International Journal of Central Banking, forthcoming

read publication
cover_applied-economics-letters.jpg

For How Long Do IMF Forecasts of World Economic Growth Stay Up-to-date?

Katja Heinisch Axel Lindner

in: Applied Economics Letters, forthcoming

Abstract

This study analyses the performance of the International Monetary Fund (IMF) World Economic Outlook output forecasts for the world and for both the advanced economies and the emerging and developing economies. With a focus on the forecast for the current year and the next year, we examine the durability of IMF forecasts, looking at how much time has to pass so that IMF forecasts can be improved by using leading indicators with monthly updates. Using a real-time data set for GDP and for indicators, we find that some simple single-indicator forecasts on the basis of data that are available at higher frequency can significantly outperform the IMF forecasts as soon as the publication of the IMF’s Outlook is only a few months old. In particular, there is an obvious gain using leading indicators from January to March for the forecast of the current year.

read publication

Should Forecasters Use Real-time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence

Katja Heinisch Rolf Scheufele

in: German Economic Review, forthcoming

Abstract

In this paper, we investigate whether differences exist among forecasts using real‐time or latest‐available data to predict gross domestic product (GDP). We employ mixed‐frequency models and real‐time data to reassess the role of surveys and financial data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real‐time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.

read publication
cover_review-of-financial-studies.png

Bank Response To Higher Capital Requirements: Evidence From A Quasi-natural Experiment

Reint E. Gropp Thomas Mosk Steven Ongena Carlo Wix

in: Review of Financial Studies, forthcoming

Abstract

We study the impact of higher capital requirements on banks’ balance sheets and its transmission to the real economy. The 2011 EBA capital exercise provides an almost ideal quasi-natural experiment, which allows us to identify the effect of higher capital requirements using a difference-in-differences matching estimator. We find that treated banks increase their capital ratios not by raising their levels of equity, but by reducing their credit supply. We also show that this reduction in credit supply results in lower firm-, investment-, and sales growth for firms which obtain a larger share of their bank credit from the treated banks.

read publication
cover_journal-of-banking-and-finance.jpg

Cross-border Transmission of Emergency Liquidity

Thomas Kick Michael Koetter Manuela Storz

in: Journal of Banking & Finance, forthcoming

Abstract

We show that emergency liquidity provision by the Federal Reserve transmitted to non-U.S. banking markets. Based on manually collected holding company structures, we identify banks in Germany with access to U.S. facilities. Using detailed interest rate data reported to the German central bank, we compare lending and borrowing rates of banks with and without such access. U.S. liquidity shocks cause a significant decrease in the short-term funding costs of the average German bank with access. This reduction is mitigated for banks with more vulnerable balance sheets prior to the inception of emergency liquidity. We also find a significant pass-through in terms of lower corporate credit rates charged for banks with the lowest pre-crisis leverage, US-dollar funding needs, and liquidity buffers. Spillover effects from U.S. emergency liquidity provision are generally confined to short-term rates.

read publication

How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina

Claudia Lambert Felix Noth U. Schuewer

in: Review of Finance, forthcoming

read publication

Size of Training Firms and Cumulated Long-Run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers

Steffen Müller Renate Neubäumer

in: International Journal of Manpower, forthcoming

read publication

2018 ASSA Annual Meeting

Presentations of IWH researchers at the ASSA annual conference 2018 in Philadelphia:

Paper Sessions:

Poster Sessions:

Discussions:

  • Michael Koetter: The Interest of Being Eligible (J.-S. Mésonnier, C. O'Donnell, O. Toutain)

Current Events

Veranstaltung
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Aug 2018
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Aug 2018

Workshops and conferences

8th IWH/INFER Workshop on International Capital Flows and Macroprudential Stability

Dr Hiro Ito University of Portland
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IWH at a Glance

Chris Becker Dmitri Bershadskyy Hannes Böhm Matthias Brachert Richard Bräuer Hans-Ulrich Brautzsch João Carlos Claudio Stefano Colonnello Aida Ćumurović Hans Degryse Liuchun Deng Eva Dettmann Andrej Drygalla Stefan Eichler Daniel Fackler Stefan Gießler Reint E. Gropp Eva Hank Iftekhar Hasan Peter Haug Gerhard Heimpold Katja Heinisch Boris Hirsch Florian Hoffmann Lisa Hölscher Oliver Holtemöller Sabrina Jeworrek Martina Kämpfe Michael Koetter Thomas Krause Alexander Kriwoluzky Boreum Kwak Cornelia Lang Axel Lindner Helge Littke Udo Ludwig Antonios Mavropoulos William McShane Matthias Mertens Steffen Müller Georg Neuschäffer Felix Noth Matias Ossandon Busch Felix Pohle Oliver Rehbein Adrian Maarten Rodriguez del Valle den Ouden Jan-Christopher Scherer Kirsten Schmidt Christoph Schult Birgit Schultz Gregor von Schweinitz Viktor Slavtchev Talina Sondershaus Moritz Stieglitz Mirko Titze Lena Tonzer Mathias Trabandt Konstantin Wagner Joschka Waibel Matthias Wieschemeyer Qizhou Xiong Götz Zeddies
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