27.03.2024 • 10/2024
Joint Economic Forecast 1/2024: Headwinds from Germany and abroad: institutes revise forecast significantly downwards
According to Germany’s five leading economic research institutes, the country’s economy shows cyclical and structural weaknesses. In their spring report, they revised their GDP forecast for the current year significantly downward to 0.1%. In the recent fall report, the figure was still 1.3%. Expectations for the coming year are almost unchanged at 1.4% (previously 1.5%). However, the level of economic activity will then be over 30 billion euros lower due to the current weak phase.
Oliver Holtemöller
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Global Political Ties and the Global Financial Cycle
Gene Ambrocio, Iftekhar Hasan, Xiang Li
IWH Discussion Papers,
No. 23,
2023
Abstract
We study the implications of forging stronger political ties with the US on the sensitivities of stock returns around the world to a global common factor – the global financial cycle. Using voting patterns at the United Nations as a measure of political ties with the US along with various measures of the global financial cycle, we document evidence indicating that stronger political ties with the US amplify the sensitivities of stock returns in developing countries to the global financial cycle. We explore several channels and find that a deepening of financial linkages along with a reduction in information asymmetries and an amplification of sentiment are potentially important factors behind this result.
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The Promise and Peril of Entrepreneurship
Robert W. Fairlie, Zachary Kroff, Javier Miranda, Nikolas Zolas
MIT Press,
2023
Abstract
Startups create jobs and power economic growth. That's an article of faith in the United States—but, as The Promise and Peril of Entrepreneurship reveals, our faith may be built on shaky ground. Economists Robert Fairlie, Zachary Kroff, Javier Miranda, and Nikolas Zolas—working with Census Bureau microdata—have developed a new data set, the Comprehensive Startup Panel, that tracks job creation and the survival of every startup in the country. In doing so, they recalibrate our understanding of how startups behave in the US economy. Specifically, their work seeks to answer three critical questions: How many jobs does each entrepreneur create? Do those jobs disappear quickly? And how long do entrepreneurial enterprises survive?
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Why Is the Roy-Borjas Model Unable to Predict International Migrant Selection on Education? Evidence from Urban and Rural Mexico
Stefan Leopold, Jens Ruhose, Simon Wiederhold
IWH Discussion Papers,
No. 16,
2023
Abstract
The Roy-Borjas model predicts that international migrants are less educated than nonmigrants because the returns to education are generally higher in developing (migrant-sending) than in developed (migrant-receiving) countries. However, empirical evidence often shows the opposite. Using the case of Mexico-U.S. migration, we show that this inconsistency between predictions and empirical evidence can be resolved when the human capital of migrants is assessed using a two-dimensional measure of occupational skills rather than by educational attainment. Thus, focusing on a single skill dimension when investigating migrant selection can lead to misleading conclusions about the underlying economic incentives and behavioral models of migration.
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Cross-country Evidence on the Allocation of COVID-19 Government Subsidies and Consequences for Productivity
Tommaso Bighelli, Tibor Lalinsky, Juuso Vanhala
Journal of the Japanese and International Economies,
June
2023
Abstract
We study the consequences of the Covid-19 pandemic and related policy support on productivity. We employ an extensive micro-distributed exercise to access otherwise unavailable individual data on firm performance and government subsidies. Our cross-country evidence for five EU countries shows that the pandemic led to a significant short-term decline in aggregate productivity and the direct support to firms had only a limited positive effect on productivity developments. A thorough comparative analysis of the distribution of employment and overall direct subsidies, considering separately also relative firm-level size of support and the probability of being supported, reveals ambiguous cross-country results related to the firm-level productivity and points to the decisive role of other firm characteristics.
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05.04.2023 • 9/2023
East German economy has come through energy crisis well so far – Implications of the Joint Economic Forecast Spring 2023 and new data for the East German economy
In 2022, the East German economy expanded by 3.0%, significantly stronger than the economy in West Germany (1.5%). The background is a more robust development of labour and retirement incomes. For 2023, the Halle Institute for Economic Research (IWH) forecasts a higher GDP growth rate of 1% in East Germany than in Germany as a whole (0.3%). The unemployment rate is expected to stagnate, with 6.8% in 2023 and 6.7% in the following year.
Oliver Holtemöller
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Headwinds from Germany and abroad: institutes revise forecast significantly downwards According to Germany’s five...
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