Economic Mobility Likely to Increase Significantly after Relaxation – but also Number of COVID-19 Cases
Oliver Holtemöller, Malte Rieth
IWH Policy Notes,
No. 3,
2021
Abstract
In Germany, measures to contain the coronavirus were relaxed in some areas at the beginning of March; in many places, for example, the restrictions on private and public gatherings were eased, and retail stores are increasingly able to receive customers again. The aim of these decisions is to allow for more economic mobility and personal contact between people. However, the frequency of contact is a major factor influencing the rate at which the coronavirus spreads, especially since the relaxations have so far not been accompanied by a systematic testing strategy; and vaccination progress has so far also fallen short of expectations. Estimates based on a model of the relationship between containment measures (Oxford COVID-19 Government Response Tracker, Stringency Index), economic mobility (Google Mobility Data), new corona infections, and deaths with data from 44 countries suggest that the recent relaxations increase economic mobility by ten percentage points and the number of new infections and deaths in Germany by 25%. Because both continued lockdown and relaxations have significant negative consequences, it is even more important to enable further relaxations through better testing and quarantine strategies and by increasing the pace of vaccination without putting people's health at risk.
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Power Generation and Structural Change: Quantifying Economic Effects of the Coal Phase-out in Germany
Katja Heinisch, Oliver Holtemöller, Christoph Schult
Energy Economics,
2021
Abstract
In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.
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11.03.2021 • 8/2021
New wave of infections suspends economic recovery
The lockdown is being eased only slightly in Germany in March 2021, and gross domestic product (GDP) declines significantly in the first quarter of 2021. As vaccination campaigns progress and restrictions are gradually eased, a normalisation of household consumption patterns will likely boost the economy later during the year. The Halle Institute for Economic Research (IWH) forecasts that GDP will increase by 3.7% in 2021, following a decline of 4.9% in 2020. In East Germany, both the contraction and the rebound are much less pronounced.
Oliver Holtemöller
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Disentangling Covid-19, Economic Mobility, and Containment Policy Shocks
Annika Camehl, Malte Rieth
IWH Discussion Papers,
No. 2,
2021
Abstract
We study the dynamic impact of Covid-19, economic mobility, and containment policy shocks. We use Bayesian panel structural vector autoregressions with daily data for 44 countries, identified through sign and zero restrictions. Incidence and mobility shocks raise cases and deaths significantly for two months. Restrictive policy shocks lower mobility immediately, cases after one week, and deaths after three weeks. Non-pharmaceutical interventions explain half of the variation in mobility, cases, and deaths worldwide. These flattened the pandemic curve, while deepening the global mobility recession. The policy tradeoff is 1 p.p. less mobility per day for 9% fewer deaths after two months.
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04.03.2021 • 7/2021
IWH Bankruptcy Update: German Bankruptcy Rates Remain Low in February
Bankruptcies statistics trended sideways at a low level in February 2021. Furthermore, the Halle Institute for Economic Research (IWH) does not anticipate higher bankruptcy rates in the coming months, despite Germany’s prolonged lockdown. These are the key findings of the IWH Bankruptcy Update, which provides monthly statistics on corporate bankruptcies in Germany.
Steffen Müller
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04.02.2021 • 5/2021
IWH Bankruptcy Update: Wave of bankruptcies in retail and hospitality has yet to materialise as downward trend in statistics continues
The number of reported bankruptcies in Germany fell in January 2021. Furthermore, bankruptcy statistics are anticipated to stay at a low level in coming months, according to the Halle Institute for Economic Research (IWH), which provides monthly statistics on corporate bankruptcies in Germany with its IWH Bankruptcy Update.
Steffen Müller
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25.01.2021 • 2/2021
High public deficits not only due to the pandemic – Medium-term options for fiscal policy
According to the IWH’s medium-term projection, Germany's gross domestic product will grow more slowly between 2020 and 2025 than before, not only because of the pandemic crisis, but also because the work force will decline. The resulting structural public deficits are, if the legal framework remains unchanged, likely to be higher than the debt brake allows. Consolidation measures, especially if they relate to government revenues, entail economic losses in the short term. “There is much to be said, also from a theoretical point of view, for not abolishing the debt brake, but for relaxing it to some extent,” says Oliver Holtemöller, head of the Department of Macroeconomics and vice president at Halle Institute for Economic Research (IWH).
Oliver Holtemöller
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07.01.2021 • 1/2021
IWH Bankruptcy Update: Bankruptcies Tick Upward in December
In December 2020 the number of corporate bankruptcies in Germany experienced a noticeable uptick reaching pre-COVID levels. According to the Halle Institute for Economic Research (IWH), which monitors corporate bankruptcies in Germany, similar bankruptcy figures can be expected for January and February of 2021.
Steffen Müller
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17.12.2020 • 27/2020
Much more bankruptcies expected than currently observed in Germany
In a recession, the number of bankruptcies usually increases with some delay. However, despite the corona crisis, the number of bankruptcies in Germany is lower than predicted based on the long-term trend. The state aid packages and the suspension of the insolvency rules have led to fewer bankruptcies than expected. The Halle Institute for Economic Research (IWH) has estimated how many bankruptcies would actually have been likely to occur by industry because of the corona recession if the typical economic pattern had been in place. The results indicate that after the end of the state aid and exception rules bankruptcies are likely to pick up.
Oliver Holtemöller
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16.12.2020 • 26/2020
New wave of infections delays economic recovery in Germany
The lockdown is causing production in Germany to decline at the end of the year. When restrictions will be relaxed again, the recovery is likely to pick up pace only slowly, partly because the temporary reduction in value-added taxes is expiring. In spring, milder temperatures and an increasing portion of the population being vaccinated are likely to support the German economy to expand more strongly. The Halle Institute for Economic Research (IWH) forecasts that gross domestic product will increase by 4.4% in 2021, following a 5% decline in 2020. In East Germany, both the decline and the recovery will be significantly less pronounced.
Oliver Holtemöller
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