Same, but Different: Testing Monetary Policy Shock Measures
Alexander Kriwoluzky, Stephanie Ettmeier
IWH Discussion Papers,
No. 9,
2017
Abstract
In this study, we test whether three popular measures for monetary policy, that is, Romer and Romer (2004), Barakchian and Crowe (2013), and Gertler and Karadi (2015), constitute suitable proxy variables for monetary policy shocks. To this end, we employ different test statistics used in the literature to detect weak proxy variables. We find that the measure derived by Gertler and Karadi (2015) is the most suitable in this regard.
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German Economy on Track — Economic Policy Needs to Be Realigned
Roland Döhrn, Ferdinand Fichtner, Oliver Holtemöller, Stefan Kooths, Timo Wollmershäuser
Wirtschaftsdienst,
No. 10,
2016
Abstract
The German economy is experiencing a moderate recovery: GDP is expected to grow by 1.9 percent this year, 1.4 percent next year, and 1.6 percent in 2018. Over the course of the forecast period, capacity utilisation will be somewhat higher than in the longterm average. Nevertheless, the contribution of corporate investment to the current upswing is minimal. The global economy is generating only minor stimulating effects, which means that exports are increasing only moderately. The extremely low long-term interest rates are likely to reflect not only the current monetary policy, but also low growth expectations. All of these factors are inhibiting investment into equipment, and thus, consumption continues to be the main growth driver. Private consumption is benefiting from the sustained increase in employment; the high expenditures for accommodating and integrating the refugees is still having a strong impact on public spending. Residential construction is getting a boost from the low interest rates.
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The Importance of Localized Related Variety for International Diversification of Corporate Technology
Eva Dettmann, Iciar Dominguez Lacasa, Jutta Günther, Björn Jindra
Regional Studies,
No. 10,
2016
Abstract
Internationalization of research and development has increased substantially in recent years. This paper analyses the determinants of spatial distribution of foreign technological activities across 96 regions in Germany. It identifies foreign technological activities by applying the cross-border ownership concept to patent applications. The main proposition is that regions with higher related variety of technological activities between sectors attract more foreign technological activities. The estimations show that this is the case in regions characterized by a high overall technological strength. This suggests that related variety facilitates technological diversifications of foreign corporations in regions at the top of the geographic hierarchy.
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Macroeconomic Trade Effects of Vehicle Currencies: Evidence from 19th Century China
Makram El-Shagi, Lin Zhang
Abstract
We use the Chinese experience between 1867 and 1910 to illustrate how the volatility of vehicle currencies affects trade. Today’s widespread vehicle currency is the dollar. However, the macroeconomic effects of this use of the dollar have rarely been addressed. This is partly due to identification problems caused by its international importance. China had adopted a system, where silver was used almost exclusively for trade, similar to a vehicle currency. While being important for China, the global role of silver was marginal, alleviating said identification problems. We develop a bias corrected structural VAR showing that silver price fluctuations significantly affected trade.
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International Banking and Liquidity Risk Transmission: Evidence from Canada
James Chapman, H. Evren Damar
IMF Economic Review,
No. 3,
2015
Abstract
This paper investigates how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active Canadian banks, and whether this transmission is influenced by individual bank characteristics. It finds that Canadian banks expanded their foreign lending during the recent financial crisis, often through acquisitions of foreign banks. It also finds evidence that internal capital markets play a role in the lending activities of globally active Canadian banks during times of heightened liquidity risk.
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Switching to Exchange Rate Flexibility? The Case of Central and Eastern European Inflation Targeters
Andrej Drygalla
FIW Working Paper, Nr. 139,
No. 139,
2015
Abstract
This paper analyzes changes in the monetary policy in the Czech Republic, Hungary, and Poland following the policy shift from exchange rate targeting to inflation targeting around the turn of the millennium. Applying a Markovswitching dynamic stochastic general equilibrium model, switches in the policy parameters and the volatilities of shocks hitting the economies are estimated and quantified. Results indicate the presence of regimes of weak and strong responses of the central banks to exchange rate movements as well as periods of high and low volatility. Whereas all three economies switched to a less volatile regime over time, findings on changes in the policy parameters reveal a lower reaction to exchange rate movements in the Czech Republic and Poland, but an increased attention to it in Hungary. Simulations for the Czech Republic and Poland also suggest their respective central banks, rather than a sound macroeconomic environment, being accountable for reducing volatility in variables like inflation and output. In Hungary, their favorable developments can be attributed to a larger extent to the reduction in the size of external disturbances.
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Post-transition Regions as Locations for Foreign Direct Investment of Multinational Enterprises
Andrea Gauselmann
Hochschulschrift, Online-Publikation,
2014
Abstract
Multinational enterprises invest abroad to tap into location-specific advantages and to enhance their own competitiveness. At the same time, they increase productivity and industrial up-grading in the region of location and can be considered agents of technological and economic development. The aim of the thesis is to contribute to current research by investigating, which determinants and motives influence foreign investors to locate in European post-transition economies, how they appraise the quality of location factors on-site and under which conditions a knowledge and technology transfer takes place between the foreign owned firm and domestic firms, thereby leading to a better understanding of what is the impact and benefit of foreign investment in these regions.
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Determinants of Knowledge Exchange Between Foreign and Domestic Enterprises in European Post-transition Economies
Andrea Gauselmann
Journal Economia e Politica Industriale (Journal of Industrial and Business Economics),
No. 4,
2014
Abstract
The aim of this paper is to contribute to the literature on internationalised research and development by investigating determinants of knowledge and technology transfer between foreign subsidiaries and the local economy in European post-transition economies. This inquiry leads to a better understanding of determinants that influence this knowledge and technology exchange. Applying a logit model, we find that, in particular, the foreign subsidiary’s corporate governance structure, its embeddedness in the multinational enterprise’s internal knowledge base, its own technological capacity, the growth of the regional knowledge stock and the regional sectoral diversification are all positively associated with the transfer of knowledge. Subsidiaries’ investment motives and the relative weight of the sector of investment in the region’s economy appear to be of less importance. The analysis focuses on European post-transition economies, using the example of five selected Central Eastern European countries and East Germany. We exploit a unique dataset, the IWH FDI Micro database, which contains information on one thousand two hundred forty-five foreign subsidiaries in this region.
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Devaluation Expectations Based on Cross-listed Stocks: Evidence for Financial Crises in Argentina Then and Now
Stefan Eichler
Applied Economics Letters,
No. 10,
2014
Abstract
I use the relative prices of American Depositary Receipts and their underlying stocks to derive devaluation expectations. I find that stockholders currently perceive an overvalued peso. Devaluation expectations are driven by the incentive of competitive devaluation and sovereign default risk.
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Has the Euro Increased International Price Elasticities?
Oliver Holtemöller, Götz Zeddies
Empirica,
No. 1,
2013
Abstract
The introduction of the Euro has been accompanied by the hope that international competition between EMU member states would increase due to higher price transparency. This paper contributes to the literature by analyzing price elasticities in international trade flows between Germany and France and between Germany and the United Kingdom before and after the introduction of the Euro. Using disaggregated Eurostat trade statistics, we adopt a heterogeneous dynamic panel framework for the estimation of price elasticities. We suggest a Kalman-filter approach to control for unobservable quality changes which otherwise would bias estimates of price elasticities. We divide the complete sample, which ranges from 1995 to 2008, into two sub-samples and show that price elasticities in trade between EMU members did not change substantially after the introduction of the Euro. Hence, we do not find evidence for an increase in international price competition resulting from EMU.
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