Tentative Recovery, Public Debt on the Rise
Wirtschaft im Wandel,
2. Sonderausgabe
2009
Abstract
In autumn 2009, the world economy appears to be growing again. The situation has improved mainly because drastic measures of central banks and governments stabilized the financial sector. More recently, the real economy is supported by fiscal programs taking effect. However, recoveries are usually slow if, as it is the case now, recessions have been intertwined with banking and housing crises. Thus, the industrial economies will not gain much dynamics this year and next, while chances for an upswing in emerging economies are much better.
The German economy stabilized during summer as well, with remarkably robust private consumption. An upswing, however, is, due to several factors, not in sight: Some important export markets will not rebound quickly, and consumption will be dampened by rising unemployment that, up to now, has been contained, not least with the aid of short-term working schemes. All in all, production shrinks by 5% in 2009 and will increase by no more than 1.2% next year. Public deficits are on the rise, with (in relation to GDP) 3.2% this year and 5.2% in 2010.
A credit crunch due to deteriorating balance sheets of banks is a major risk for the German economy. Policy should address this problem by making sure that equity ratios are sufficiently high. One way would be to impose public capital on banks that do not comply with certain regulatory ratios. These should be higher than the ones presently in force. Fiscal policy should begin consolidating in 2011, mainly by dampening the rise of expenditures. Tax cuts are only justified if they are accompanied by very ambitious spending cuts.
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Von der politischen zur demographischen Transformation: Ostdeutschland am Scheideweg
Alexander Kubis, Lutz Schneider
Empirische und theoretische Analysen aktueller wirtschafts- und finanzpolitischer Fragestellungen,
2009
Abstract
The composition of population in East Germany has strongly changed since the political transformation process. The development is pushed, apart from the specific fertility and mortality behavior, by a persistent migration loss in the last 20 years. This migration deficit of East Germany has accumulated to 1.9 million people. Against this background, the article analyses the risk of demographic change to the potential regional development.
However, a further drastic decrease in population is probable due to missing births. In a short perspective, the contraction of the employed persons increases the capital intensity and thus the productivity of a region. In the long run, it comes to a lasting decrease of the labour supply. Therefore, the impact of demography on the East German development is uncertain.
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Out-migration and Regional Convergence
Alexander Kubis, Lutz Schneider
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 1 -
2009
Abstract
Since 1989, the migration deficit of East Germany has accumulated to 1.8 million people. Against this background, the contribution analyses the relationship between regional migration and regional growth. From a theoretical point of view, one might find reasons in favour and in opposition to a convergence supporting function of migration. If migrants are taken from the upper tail of the human capital distribution of a poor region, divergence is the probable outcome. If on the other hand people with low human capital endowment move to richer regions, migration might enhance regional convergence.
The empirical analysis how regional migration and convergence are interrelated is performed on the basis of German districts within a period from 1995 to 2006. The concept of ß-convergence is applied and a cross-section model controlling for spatial correlation between the error terms is estimated.
The results indicate convergence on the regional level; East German regions seem to catch up particularly fast. The effect of migration is twofold. Out-migration from poor region is correlated with strong growth in these regions. However, the corresponding migration towards richer region is accompanied with growth in these regions, too. Therefore, the impact of migration on convergence is uncertain. Nevertheless, the outcome is in favour of an aggregate benefit of migration if people move from poor to rich regions.
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The Long Way to Convergence
Rolf Scheufele, Udo Ludwig
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 1 -
2009
Abstract
After nearly 20 years of economic development in unified Germany, East German states compared to the West German Leander still lag behind in terms of welfare. During the years immediately following unification, East Germany displayed high economic growth, but lost its relative strength largely in recent times. Therefore, this paper asks whether East Germany is still catching up in terms of per capita output. By considering the cross- section of German states, one can estimate an average convergence speed of approximately 2% per year. However, this catching-up process is partly driven by demographic effects and by migration from East to West Germany. If one considers a time series test of convergence, a catching-up process can still be identified, although the speed is lower and estimated to be around 1%. This implies that the convergence process of East Germany will need further decades until the regional gap will be closed.
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Inflation Expectations: Does the Market Beat Professional Forecasts?
Makram El-Shagi
IWH Discussion Papers,
No. 16,
2009
Abstract
The present paper compares expected inflation to (econometric) inflation forecasts
based on a number of forecasting techniques from the literature using a panel of
ten industrialized countries during the period of 1988 to 2007. To capture expected
inflation we develop a recursive filtering algorithm which extracts unexpected inflation from real interest rate data, even in the presence of diverse risks and a potential Mundell-Tobin-effect.
The extracted unexpected inflation is compared to the forecasting errors of ten
econometric forecasts. Beside the standard AR(p) and ARMA(1,1) models, which
are known to perform best on average, we also employ several Phillips curve based approaches, VAR, dynamic factor models and two simple model avering approaches.
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Entwicklung des Fachkräftebedarfs in Thüringen bis 2015
Herbert S. Buscher, Eva Dettmann, Christian Schmeißer, Dirk Trocka, Marco Sunder
IWH-Sonderhefte,
No. 2,
2009
Abstract
On behalf of the Thuringian Ministry of Economics, Technology, and Labor, the Halle Institute for Economic Research (IWH) has conducted a survey of current labor market conditions in Thuringia. We forecast changes in labor demand within occupation groups in the period 2009-2015. According to our predictions, 80 000 additional workers are required both to replace older workers reaching retirement age and to accommodate industrial growth resulting from structural change. While the size of the working-age population will be large enough to meet this demand, there is a risk of occupational mismatch and lack of labor market integration of certain groups. In this context we devise policy recommendations. In addition, we present results of a survey of approximately 1 000 Thuringian companies. Interviews were conducted by IWH in the summer of 2008 and cover topics on previous and future staffing policy. The questionnaire focuses on companies’ strategies to meet their demand for skilled labor and their evaluation of potential measures in the fields of education, labor market, and economic policy.
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Great Moderation at the Firm Level? Unconditional vs. Conditional Output Volatility
Claudia M. Buch, Jörg Döpke, K. Stahn
B.E. Journal of Economic Analysis and Policy,
No. 1,
2009
Abstract
We test whether there has been a “Great Moderation“ of output volatility at the firm level. The multifactor residual model proposed by Pesaran (2006) is used to isolate the idiosyncratic component of firms' sales growth from macroeconomic developments. This methodology is applied to a balanced panel of about 1,200 German firms covering a 35-year period (1971-2005). Our research has three main findings. First, unconditional firm-level volatility and aggregate output volatility have seen similar downward trends. Second, conditional, idiosyncratic firm-level volatility does not exhibit a downward trend. Third, there is a positive link between growth and volatility at the firm level.
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Co-existence of Unemployment and Skilled Labour Shortage? Evidence from Thuringia
Dirk Trocka, Marco Sunder
Wirtschaft im Wandel,
No. 4,
2009
Abstract
In the light of favourable business conditions during the previous years, business organizations have repeatedly cautioned about a skilled labour shortage that could constrain future development of enterprises. While shortages may be typical of phases of economic expansion, the skilled labour shortage might turn into a permanent phenomenon if one takes into account the shrinking of the working-age population. The demographic transition occurs at an especially rapid pace in Eastern Germany. At the same time, this region still exhibits high rates of chronic unemployment, which renders the possibility of a skilled labour shortage questionable.
We focus on the federal state of Thuringia and investigate two questions. Firstly, we evaluate to what extent occupation-specific bottlenecks exist both in Germany and in Thuringia, using a set of criteria based on official labour market statistics. We find evidence of high utilization of labour supply in technical and metalworking professions in Germany. In the majority of these occupations, the same is true for Thuringia. Hence, a high level of unemployment and skilled labour shortage may coexist, at least in a transition phase. Secondly, we investigate whether companies in Thuringia already expect problems when searching for skilled personnel in the near future. For this purpose, the IWH has conducted a survey among approximately 1 000 companies. It turns out that 61% of the interviewed companies anticipate such problems, with statistically significant differences with respect to the companies’ characteristics. In addition, we discuss selected policies that companies plan to implement in the field of human resource management when anticipating problems.
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