Monetary Policy and Bank Lending in Japan: An Agency-based Approach
Diemo Dietrich
Incentives and Economic Behaviour,
2005
Abstract
This paper studies the incentive effects on Japanese banks of a low interest rate policy by the Bank of Japan. It utilizes a simplified version of an overlapping principal-agent-style model of corporate finance originally developed in Dietrich (2003). This model is dedicated to study the monetary policy transmission mechanism by combining arguments of the broad credit channel and the bank lending channel taking into account that banks need to be provided with incentives to monitor entrepreneurs. We argue that stipulating banks to possess some amount of own capital generate these incentives. We denote this capital requirement to be market based and show that this requirement depends crucially on interest rates. After revealing some shortcomings of the credit crunch hypothesis, we apply this approach to the Japanese economy. As a result, a policy of very low interest rates may not only be inefficient but counterproductive to reactivate a stumbled economy via the usual credit channel.
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East German economy: Catching up in tiny steps
Wirtschaft im Wandel,
No. 6,
2005
Abstract
Trotz der allgemein schwachen Inlandsnachfrage in ganz Deutschland ist die gesamtwirtschaftliche Produktion im Ostteil der Republik 2004 das dritte Jahr in Folge gestiegen. Kräftig erhöht hat sich die Nachfrage des Auslands nach Gütern aus Ostdeutschland. Die Warenausfuhren sind überdurchschnittlich in die alten EU-Länder gestiegen, Impulse aus dem Vollzug der Osterweiterung lassen sich dagegen für die neuen Bundesländer kaum nachweisen. Nach dem Fall der letzten Handelsschranken hat es auch keinen Importboom aus den neuen Mitgliedsländern gegeben. Der Anstoß aus dem Ausland hat zwar die Exportindustrien und ihre Zulieferzweige erreicht, aber infolge des geringen Gewichts dieses Sektors war die Wirkung auf die Gesamtwirtschaft gering....
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Hartz IV: 1-Euro-Jobs setzen falsche Anreize
Herbert Buscher
Wirtschaft im Wandel,
No. 11,
2004
Abstract
The paper analyzes the different incentives due to different possibilities of additional earnings to the receipt of unemployment benefits. Long term unemployed people may earn additional income due to a regular occupation in the first labor market or due to social work. In the latter case people receive a expense allowance which they are allowed to hold for the full amount. Contrary to this income earned in a regular job is partly reduced (by 85 % for the first 400 Euro, e.g.) which might make working in the social or common sector more attractive than working in the first labor market. Secondly, given the unemployment benefits and the additional amount of earnings it might be more attractive with respect to total income than the income earned in the low wage sector of the economy. This might imply a negative incentive for those who are working in a low wage sector.
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The MCI as a Monetary Policy Guide in a Small, Open Emerging Market Economy
Philippe Burger, Tobias Knedlik
South African Journal of Economics,
No. 72,
2004
Abstract
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Why do banks hold capital in excess of regulatory requirements? A functional approach
Diemo Dietrich, Uwe Vollmer
IWH Discussion Papers,
No. 192,
2004
Abstract
This paper provides an explanation for the observation that banks hold on average a capital ratio in excess of regulatory requirements. We use a functional approach to banking based on Diamond and Rajan (2001) to demonstrate that banks can use capital ratios as a strategic tool for renegotiating loans with borrowers. As capital ratios affect the ability of banks to collect loans in a nonmonotonic way, a bank may be forced to exceed capital requirements. Moreover, high capital ratios may also constrain the amount a banker can borrow from investors. Consequently, the size of the banking sector may shrink.
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Competition Policy in Central Eastern Europe in the Light of EU Accession
Jens Hölscher
Journal of Common Market Studies,
No. 2,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Competition Policy in Central East Europe in light of EU Accession
Johannes Stephan
Journal of Common Market Studies,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Investment, Financial Markets, New Economy Dynamics and Growth in Transition Countries
Albrecht Kauffmann, P. J. J. Welfens
Economic Opening Up and Growth in Russia: Finance, Trade, Market Institutions, and Energy,
2004
Abstract
The transition to a market economy in the former CMEA area is more than a decade old and one can clearly distinguish a group of relatively fast growing countries — including Estonia, Poland, the Czech Republic, Hungary and Slovenia — and a majority of slowly growing economies, including Russia and the Ukraine. Initial problems of transition were natural in the sense that systemic transition to a market economy has effectively destroyed part of the existing capital stock that was no longer profitable under the new relative prices imported from world markets; and there was a transitory inflationary push as low state-administered prices were replaced by higher market equilibrium prices. Indeed, systemic transformation in eastern Europe and the former Soviet Union have brought serious transitory inflation problems and a massive transition recession; negative growth rates have continued over many years in some countries, including Russia and the Ukraine, where output growth was negative throughout the 1990s (except for Russia, which recorded slight growth in 1997). For political and economic reasons the economic performance of Russia is of particular relevance for the success of the overall transition process. If Russia would face stagnation and instability, this would undermine political and economic stability in the whole of Europe and prospects for integrating Russia into the world economy.
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Current Trends - East German economy slowly emerges from stagnation
Udo Ludwig
Wirtschaft im Wandel,
No. 16,
2003
Abstract
Die gesamtwirtschaftliche Aktivität in Ostdeutschland hat laut dem Konjunkturbarometer des IWH die Schwäche vom Sommerhalbjahr überwunden und nimmt im Schlussquartal wieder zu. Im Vergleich zu 2002 insgesamt bedeutet dies einen Zuwachs des Bruttoinlandsprodukts in diesem Jahr von 0,3%. Quelle dieser Ergebnisse ist die Vierteljahresrechnung des IWH für die Entstehung des Bruttoinlandsprodukts in den neuen Bundesländern, die an die Halbjahresentwicklung laut der amtlichen VGR der Länder angepasst und anhand aktueller sektoraler Indikatoren für die beiden letzten Quartale des Jahres 2003 geschätzt wurde.
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Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap
Johannes Stephan
IWH-Sonderhefte,
No. 5,
2003
Abstract
This report summarises the results generated in empirical analysis within a larger EU 5th FP RTD-project on the determinants of productivity gaps between the current EU-15 and accession states in Central East Europe. The focus of research in this part of the project is on sectoral specialisation patterns emerging as a result of intensifying integration between the current EU and a selection of six newly acceding economies, namely Estonia, Poland, the Czech and Slovak Republics, Hungary and Slovenia. The research-leading question is concerned with the role played by the respective specialisation patterns for (i) the explanation of observed productivity gaps and for (ii) the projection of future potentials of productivity growth in Central East Europe.
For the aggregated level, analysis determines the share of national productivity gaps accountable to acceding countries’ particular sectoral patterns, and their role for aggregate productivity growth: in Poland, the Slovak Republic and Hungary, sectoral shares of national productivity gaps are considerable and might evolve into a ‘barrier’ to productivity catch-up.Moreover, past productivity growth was dominated by a downward adjustment in employment rather than structural change. With the industrial sector of manufacturing having been identified as the main source of national productivity gaps and growth, the subsequent analysis focuses on the role of industrial specialisation patterns and develops an empirical model to project future productivity growth potentials. Each chapter closes with some policy conclusions.
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