Taken by Storm: Business Financing and Survival in the Aftermath of Hurricane Katrina
Emek Basker, Javier Miranda
Journal of Economic Geography,
No. 6,
2018
Abstract
We use Hurricane Katrina’s damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a capital-destruction shock. We find very low survival rates for businesses that incurred physical damage, particularly for small firms and less-productive establishments. Conditional on survival, larger and more-productive businesses that rebuilt their operations hired more workers than their smaller and less-productive counterparts. Auxiliary evidence from the Survey of Business Owners suggests that the differential size effect is tied to the presence of financial constraints, pointing to a socially inefficient level of exits and to distortions of allocative efficiency in response to this negative shock. Over time, the size advantage disappeared and market mechanisms seem to prevail.
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Does it Payoff to Research Economics? A Tale of Citation, Knowledge and Economic Growth in Transition Countries
Dejan Kovač, Boris Podobnik, Nikol Scrbec
Physica A: Statistical Mechanics and its Applications,
September
2018
Abstract
There are many economic theories that promote human capital as a key driver of a country’s economic growth, but it is challenging to test this theory empirically on a country level and causally interpret the coefficients due to several identification problems. We tried to answer this particular question by using a quasi-natural experiment that happened quarter century ago – the fall of communist block in Eastern Europe. We use a shock to a particular scientific field – economics, to test whether the future investment into that particular field resulted in increased welfare and economic growth. The economics paradigm that was governing all of the communist block ceased to exist. Human capital depreciated over night and all communist countries had to transit from planned economy to a market economy. In the following years countries had to adapt to market economy through additional investment in human capital and research. We find that countries which lack both of the two fourth mentioned components had 25 years later a relatively lower economic growth and wealth. Unlike economics, other fields such as physics and medicine did not go through the same process so we use them as a placebo effect for our study. We find that the relative ratio of citations between economics and physics in post-communist countries is increasing only 15 years after the “paradigm” shock which gives a suggestive evidence that timing of investment into particular scientific field matters the most.
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Channeling the Iron Ore Super-cycle: The Role of Regional Bank Branch Networks in Emerging Markets
Helge Littke
IWH Discussion Papers,
No. 11,
2018
Abstract
The role of the financial system to absorb and to intermediate commodity boom induced windfall gains efficiently presents one of the most pressing issues for developing economies. Using an exogenous increase in iron ore prices in March 2005, I analyse the role of regional bank branch networks in Brazil in reallocating capital from affected to non-affected regions. For the period from March 2004 to March 2006, I find that branches directly exposed to this shock by their geographical location experience an increase in deposit growth in the post-shock period relative to non-affected branches. Given that these deposits are not reinvested locally, I further show that branches located in the non-affected region increase lending growth depending on their indirect exposure to the booming regions via their branch network. Even tough, these results provide evidence against a Dutch Disease type crowding out of the non-iron ore sector, further evidence suggests that this capital reallocation is far from being optimal.
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The Economic Development of Saxony-Anhalt since 1990
Oliver Holtemöller, Axel Lindner
Abstract
This article describes the economic development of Saxony-Anhalt since 1990 in the context of the East German transition from a centrally planned economy to a market economy. In the early 1990s the economy of Saxony-Anhalt caught up quickly with West Germany, mainly because the capital stock was modernized and expanded. Convergence, however, has almost come to a halt for some time now and gross domestic product per employed person is still about 20% below the West German level. The challenge for economic policy is to further the catching-up process by fostering research and innovation and improving the skills of the workforce.
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19.04.2018 • 7/2018
Joint Economic Forecast Spring 2018: Germany’s Economic Experts Raise Forecast Slightly
Berlin, 19 April – Germany’s leading economic experts raised their forecasts for 2018 and 2019 slightly in their Spring Joint Economic Forecast released on Thursday in Berlin. They now expect economic growth of 2.2 percent for this year and 2.0 percent for 2019, versus 2.0 percent and 1.8 percent respectively in their autumn forecast. “The German economy is still booming, but the air is getting thinner as unused capacities are shrinking“, notes Timo Wollmershaeuser, ifo Head of Economic Forecasting. Commenting on the new German government’s economic policy, he adds: “It is precisely when the government’s coffers are full that fiscal policy should reflect the implications of its actions for overall economic stability and the sustainability of public finances. The extension of statutory pension benefits outlined in the coalition agreement runs counter to the idea of sustainability.”
Oliver Holtemöller
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Produktivitätsunterschiede zwischen West- und Ostdeutschland und mögliche Erklärungsfaktoren. Ergebnisse aus dem IAB-Betriebspanel 2016
Steffen Müller, Eva Dettmann, Daniel Fackler, Georg Neuschäffer, Viktor Slavtchev, Ute Leber, Barbara Schwengler
IAB-Forschungsbericht 16/2017,
2017
Abstract
After several years of prosperity, the economic situation of German establishments improved further in 2016. Though the productivity in East German establishments converged slightly to the West German level, a significant productivity gap between both parts of Germany still remains. Differences in the economic structure can only explain a small part of this persistent gap: a Blinder-Oaxaca decomposition suggests that the different sector composition, lower exports and lower capital intensity of East German establishments explain only about one-fifth of the backlog. The observed positive economic development is associated with a further increase in firm profitability and total employment in the establishments in both parts of Germany. It is reflected also in a further increase in the demand for skilled personnel. Even though the majority of the demand could be met in 2016, one-third of all offered jobs remained vacant. As in the past, especially establishments in construction and business services as well as very small establishments, particularly in East Germany, faced considerable recruitment problems. The occupational skill requirements increased slightly over time. The proportion of jobs for skilled workers is on average higher in East German establishments than in West Germany, suggesting a higher formal qualification level of employees in East Germany. Looking at the personnel structure, a significant increase in the share of atypical employment, particularly part-time jobs and marginal employment, over the last years become visible. The participation of establishments in vocational training remains relatively stable: about half of the enterprises that are authorized to provide vocational training do actually train apprentices. However, the corresponding fraction in East Germany is significantly lower since the economic crisis. In contrast, the share of vacant apprenticeship positions there is much higher than in West German establishments, pointing to major problems in finding suitable applicants. The share of employees participating in further training is about one third for several years. As in the past workers in low-skilled occupations participate only about half as often in training as employees in qualified jobs.
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