Konjunktur aktuell: Aufschwung in Deutschland geht weiter – Krisenprävention und Krisenmanagement in Europa unter Reformdruck
Wirtschaft im Wandel,
No. 1,
2011
Abstract
We estimate that in 2010, the German GDP has expanded by 3.7%. In all probability, growth will continue in the two following years, with output rising by 2.3% in 2011 and by 1.7% in 2012. Thus, we see the recovery of the German economy after the Great Recession as a starting point for a strong upswing. In case the fiscal crisis of peripheral euro area countries intensified, however, or if confidence in the US dollar waned due to the extremely expansive policy in the US, expectations would quickly turn pessimistic. The key task for the European economic policy is improving its ability to manage and prevent financial and fiscal crises.
The recovery of the world economy continues. This is particularly true for the US, but for the European Union as well, in spite of drastic fiscal adjustment programs in Britain and Spain. In most of emerging markets economies, economic policy has been trying to dampen frothy upswings without damaging the high growth dynamics. As a consequence, growth slowed down in Asia after last spring. Leading indicators for China and India, however, point to an acceleration of economic activity during this winter. Neighboring economies, not least the Japanese, will soon benefit from higher exports.
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Macroeconomic Challenges in the Euro Area and the Acceding Countries
Katja Drechsel
Dissertation, Online-Publikation,
2010
Abstract
The conduct of effective economic policy faces a multiplicity of macroeconomic challenges, which requires a wide scope of theoretical and empirical analyses. With a focus on the European Union, this doctoral dissertation consists of two parts which make empirical and methodological contributions to the literature on forecasting real economic activity and on the analysis of business cycles in a boom-bust framework in the light of the EMU enlargement. In the first part, we tackle the problem of publication lags and analyse the role of the information flow in computing short-term forecasts up to one quarter ahead for the euro area GDP and its main components. A huge dataset of monthly indicators is used to estimate simple bridge equations. The individual forecasts are then pooled, using different weighting schemes. To take into consideration the release calendar of each indicator, six forecasts are compiled successively during the quarter. We find that the sequencing of information determines the weight allocated to each block of indicators, especially when the first month of hard data becomes available. This conclusion extends the findings of the recent literature. Moreover, when combining forecasts, two weighting schemes are found to outperform the equal weighting scheme in almost all cases. In the second part, we focus on the potential accession of the new EU Member States in Central and Eastern Europe to the euro area. In contrast to the discussion of Optimum Currency Areas, we follow a non-standard approach for the discussion on abandonment of national currencies the boom-bust theory. We analyse whether evidence for boom-bust cycles is given and draw conclusions whether these countries should join the EMU in the near future. Using a broad range of data sets and empirical methods we document credit market imperfections, comprising asymmetric financing opportunities across sectors, excess foreign currency liabilities and contract enforceability problems both at macro and micro level. Furthermore, we depart from the standard analysis of comovements of business cycles among countries and rather consider long-run and short-run comovements across sectors. While the results differ across countries, we find evidence for credit market imperfections in Central and Eastern Europe and different sectoral reactions to shocks. This gives favour for the assessment of the potential euro accession using this supplementary, non-standard approach.
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Central Banks, Trade Unions and Reputation – Is there Room for an Expansionist Manoeuvre in the European Union?
Toralf Pusch, A. Heise
Journal of Post Keynesian Economics,
2010
Abstract
It is now a few years since the introduction of the common currency, and Europe is still experiencing high unemployment. The conventional logic attributes this problem to flaws in the labour market. In this article we look at the changes that occur if labour unions and the Central Bank have different options to choose from in a climate of uncertainty. In a single-stage game the most probable outcome is a high unemployment rate. Results change dramatically if the game is repeated. However, this effect does not occur if the Central Bank puts a too high weight on price stability. Secondly, if the trade unions do not possess the capability for coordinating and moderating their wage claims, a full employment equilibrium is out of range.
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Finance and Growth in a Bank-Based Economy: Is It Quantity or Quality that Matters?
Michael Koetter, Michael Wedow
Journal of International Money and Finance,
No. 8,
2010
Abstract
Most finance–growth studies approximate the size of financial systems rather than the quality of intermediation to explain economic growth differentials. Furthermore, the neglect of systematic differences in cross-country studies could drive the result that finance matters. We suggest a measure of bank’s intermediation quality using bank-specific efficiency estimates and focus on the regions of one economy only: Germany. This quality measure has a significantly positive effect on growth. This result is robust to the exclusion of banks operating in multiple regions, controlling for the proximity of financial markets, when distinguishing different banking sectors active in Germany, and when excluding the structurally weaker East from the sample.
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Investment Grants: Which Requirements Should be Fulfilled?
Mirko Titze, Lutz Schneider
Wirtschaft im Wandel,
No. 11,
2010
Abstract
Since the year 1969 the German government has applied investment grants to improve regional economic development of disadvantaged regions. The support of eligible firms shall enhance its investment activities. Such activities may force a sustainable development of the respective region. One requirement – amongst others – for the grant of this investment support scheme is the firm’s verification of supra-regional sales. The gains resulting from the firms’ export activities lead to additional income for that region, and this stimulates multiplicative (reinforcing) regional income processes. Since the German reunification this instrument has been applied in the new federal states, too. Due to the fact that structural deficits still exist in East Germany investment grants are adopted primarily in the new federal states. Today, some policy decision makers think that the catching-up process of disadvantaged regions is not fast enough. Against this background, the further application of investment grants is discussed controversially. Some criticism tends to the criterion of supra-regional sales. It has been argued that particularly small firms are excluded from this support scheme. However, small firms are considered as key players for regional economic activities. Moreover, firms which are highly integrated in international markets depend on world trade cycles and that might be risky for the respective region. Finally, critics believe that regional actors should be boosted in order to strengthen regional identities in terms of regional buyer-supplier-networks. This article shows that policy decision makers should maintain the criterion of supra-regional sales. Particularly, regions with a loss of inhabitants need gains from supra-regional sales to stabilise their local purchasing power. Otherwise, these regions are strongly dependent on transfer flows stemming from other regions. Beyond that, supra-regional sales indicate the firm’s international competitiveness. Finally, the most important argument for supra-regional sale might be linkages to supra-regional knowledge flows which strongly affect the region’s innovative capabilities.
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Economic Effects of Investment Grants for Water and Sewerage Infrastructure – The Case of Saxony
Peter Haug
Wirtschaft im Wandel,
No. 11,
2010
Abstract
The article deals with the regional economic growth effects of the German “Joint Scheme” for the improvement of regional economic structures (“GA-Infra”). It focuses on water and sewerage projects located in the federal state of Saxony (Germany) during the funding period 2000-2007. Evaluating these projects is important for scientific as well as for economic policy reasons.
First of all, according to general economic theory, the potential direct and indirect supply-side effects of the water and sewerage infrastructure as well as the price effects caused by this infrastructure are relevant for location decisions only to certain branches of the manufacturing industry.
Subsidies for the development of the sewerage infrastructure have been granted mostly according to the growth target of regional policy, i.e. primarily to municipalities with above-average volumes of industry sewage. This finding could not be confirmed for water provision.
A regression analysis (estimating the labour demand of the local manufacturing industry) showed no empirical evidence for any relationship between the changes in labour demand and the amount of GA-Infra funded water and sewerage infrastructure investments. This might be a consequence of the already satisfactory development condition of the infrastructure in question at the beginning of the funding period (“ubiquitous infrastructure”).
According to a survey of local governments conducted by the IWH, these results might be explained by the fact that business customers did not benefit from price reductions despite the GA-Infra funding granted to their local water and sewage disposal providers. Even though there might be some intuitively plausible reasons (decreasing population, no connection fees) for these findings, no effect on firm location decisions can be expected under these circumstances.
All in all, we do not consider the further extension of these funding priorities to be necessary. Especially, the GA-Infra water/sewerage grants should neither be used to mitigate the cost effects of demographic changes or regulation nor to compensate for losses caused by the buyer power of large firms.
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State Aid in the Enlarged European Union. An Overview
Jens Hölscher, Nicole Nulsch, Johannes Stephan
Abstract
In the early phase of transition that started with the 1990s, Central and Eastern European Countries pursued economic restructuring of the enterprise sector that involved massive injections of state support. Also foreign investment from the West and facilitation of the development of a market economy involved massive injections of state support. With their accession to the European Union (EU), levels and forms of state aid came under critical review by the European Commission. This inquiry investigates whether the integration of the new member states operates on a level playing field with respect to state aid. Quantitative and qualitative analysis is relied upon to answer this key, as well as other, related questions. Findings suggest that in recent years a level playing field across the EU has indeed emerged. State aid in the new EU member countries is rather handled more strictly than laxer compared to the ‘old’ EU countries.
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Governmental Learning as a Determinant of Economic Growth
Marina Grusevaja
IWH Discussion Papers,
No. 23,
2010
Abstract
Systemic economic transition is a process of determined radical institutional change, a process of building new institutions required by a market economy. Nowadays, the experience of transition countries with the implementation of new institutions could be reviewed as a method of economic development that despite similar singular steps has different effects on the domestic economic performance. The process of institutional change towards a market economy is determined by political will, thus the government plays an important role in carrying out the economic reforms. Among the variety of outcomes and effects the attention is drawn especially to economic growth that diverges significantly in different post-transition countries. The paper attempts to shed light upon the problem on the basis of institutional economics, of economics of innovation and partially of political economy of growth using an evolutionary, process-oriented perspective. In this context the issue central to the promotion of economic growth is the successful implementation of new institutions through governmental activities. The paper shows that under the conditions of bounded rationality and radical uncertainty economic growth is determined, inter alia, by the capacity for governmental learning.
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Political Institutionalisation and Economic Specialisation in Polycentric Metropolitan Regions – The Case of the East German ‚Saxony Triangle‘
Peter Franz, Christoph Hornych
Urban Studies,
2010
Abstract
The rising focus of politicians as well as scientists in the EU on the large urban agglomerations as centres of economic growth is accompanied by political efforts to identify and to demarcate such agglomerations under the label ‘metropolitan regions’. This study develops a theoretical framework broaching the issue of cooperation between municipalities from the perspective of regional economics as well as political science. The framework is applied to the empirical case of the polycentric metropolitan region of the ‘Saxony triangle’ in east Germany. The results show that various intervening factors prevent intense co-operation between the actors in the region. Policy implications and conclusions for future research are discussed.
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