A First Look on the New Halle Economic Projection Model
Sebastian Giesen, Oliver Holtemöller, Juliane Scharff, Rolf Scheufele
Abstract
In this paper we develop a small open economy model explaining the joint determination of output, inflation, interest rates, unemployment and the exchange rate in a multi-country framework. Our model – the Halle Economic Projection Model (HEPM) – is closely related to studies recently published by the International
Monetary Fund (global projection model). Our main contribution is that we model the Euro area countries separately. In this version we consider Germany and France, which represent together about 50 percent of Euro area GDP. The model allows for country specific heterogeneity in the sense that we capture different adjustment patterns to economic shocks. The model is estimated using Bayesian techniques. Out-of-sample and pseudo out-of-sample forecasts are presented.
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Wirtschaftsentwicklung und Staatsfinanzen: Eine Vorausschau der Jahre 2010 bis 2014
Kristina vanDeuverden, Rolf Scheufele
Wirtschaft im Wandel,
No. 1,
2010
Abstract
In 2009 the German budget was clearly in the red, and in 2010 prospects are even worse. Deficits are such impressive that consolidation became a top subject in general publicity. To provide a sound basis for this discussion the IWH presents its second midterm projection of German economic development and public finances.
While economy will improve slowly in the medium term and the output gap will be closed in the end of the projection period public finances will deteriorate until 2011. Thereafter the situation will improve but only due to cyclical reasons. In 2014 structural budget balance will have reached 2½% of nominal GDP.
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Bank Credit Standards, Demand, Pro-cyclicality and the Business Cycle: A Comment
Á. Maddaloni, J. L. Peydró Alcalde, J. Suárez, Reint E. Gropp
Moneda y crédito,
No. 230,
2010
Abstract
We analyze the determinants fo standards and demand for loans to firms and house-holds over the last business cycle using the comprehensive and confidential Bank Lending Survery from the Euro area. There is significant variation of standards and demand over the cycle. Standards for business loans vary more during the business cycle than the lending standards for households, whereas credit demand from households varies more than demand from firms. Lending standards vary mainly due to charges in perception of borrower risk, bank balance sheet positions and competitive pressures. In particular, we find that higher GDP growth softens lending standards for all loans, i. e. lending standards are pro-cyclical. However, we also find pro-cyclicality in credit demand.
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International Climate Policy after Kyoto – Economic Challenges Ahead
Wilfried Ehrenfeld
Wirtschaft im Wandel,
No. 12,
2009
Abstract
The signs are increasing that the gain in greenhouse gas emissions since the beginning of the 20th century causes the average global temperature to rise. Limiting the temperature rise to 2°C should at least avoid the worst consequences of global warming. This would require the greenhouse gas emissions to reach their maximum value by no later than 2015 and to be dramatically reduced worldwide from that time until 2050. From the economic perspective, there are a number of important questions: In the first place, how can the initial situation be described in economic categories? Therefore, the emissions should first of all be identified by region and sector and thereupon, the adjustment possibilities are to be outlined. Which costs and which revenues are associated with climate policy? The bandwidth of the estimated damage is between 5% and 20% of global gross domestic product (GDP) annually in the case of unmitigated climate change. These estimates are compared to around 1% of global GDP, which would be spent to stabilize the concentration of greenhouse gases in the atmosphere. How are the global targets to be distributed regionally and sectorally, and which economic instruments are recommended for this purpose? Obviously, tradable permits are preferred. Here, the initial assignment and the nature of the allocation on the one hand and the tradability on the other play a prominent role. What politico-economic conflicts arise and what recommendations can economists give to solve these conflicts goal-oriented? Finally, what is to recommend in terms of political economy in order to remain credible in particular in the sense of an international climate agreement?
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Warum exportiert der Osten so wenig? Eine empirische Analyse der Exportaktivitäten deutscher Bundesländer
Götz Zeddies
AStA - Wirtschafts- und Sozialstatistisches Archiv,
No. 4,
2009
Abstract
In the aftermath of re-unification, East German exports declined around 70% due to the breakdown of COMECON trade. Although since the mid-1990s export growth rates of the New Federal States were higher than those of their West German counterparts, export performance of East German States measured by the share of exports in GDP is still comparatively poor. Whereas for a long time the low export performance of East German producers was ascribed to competitive disadvantages, in the meantime structural deficits on the micro and/or macro level are often considered as the main reason. Using bilateral trade data of German Federal States, the present paper shows on the basis of an orthodox gravity model of trade that East German exports are explicitly lower than predicted by the model. But if the gravity model is augmented by additional variables representing structural differences between Federal States, the latter explain almost entirely the lower export performance of Eastern Germany. Thus, especially the smaller firm sizes and the lower shares of manufacturing industries in gross value added are identified as important explanatory factors of the comparatively weak export performance of the New German States.
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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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East German Exports: Remarkable Catch-up, but Still Lagging Behind
Götz Zeddies
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 1 -
2009
Abstract
German reunification entailed severe adjustment processes in East German export industries. With political and economic transition in Eastern Europe, at that time the main export market for East German producers, export demand initially collapsed in the early 1990s. Additionally, the introduction of the Deutschmark in Eastern Germany amounted to a massive revaluation, and international competitiveness of East German producers deteriorated. However, manufacturers in the New Federal States opened up new markets, especially in Western Europe and the Americas. As a consequence, after the downturn of construction activity and investment in the mid-1990s, international trade became the driving force of GDP-growth in Eastern Germany. Although since then, goods exports of the New Federal States grew twice as much as those of Western Germany, export ratio (goods exports as a percentage of GDP) only amounts to 22 per cent in Eastern Germany, compared to 42 per cent in the western part of the country. Even in comparison to Eastern European countries in transition, openness to trade of the New Federal States is still comparatively low. As an empirical analysis shows, this must be largely traced back to smaller firm sizes in the New Federal States as well as to the lower importance of manufacturing industries, which are traditionally more export-oriented. Moreover, East German manufacturers largely specialized on intermediate inputs, which are supplied to final assembly lines in Western Germany, but are not recorded as exports. Thereby, East German export performance is considerably underestimated.
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