14.10.2021 • 25/2021
Crisis is gradually being overcome – align actions to lower growth
The Corona pandemic still shapes the economic situation in Germany. A complete normalisation of contact-intensive activities is not to be expected in the short term. In addition, supply bottlenecks are hampering manufacturing for the time being. The German economy will reach normal capacity utilisation in the course of 2022. In their autumn report, the leading economic research institutes forecast that Gross Domestic Product (GDP) will rise by 2.4% in 2021 and by 4.8% in 2022.
Oliver Holtemöller
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Corporate Loan Spreads and Economic Activity
Anthony Saunders, Alessandro Spina, Sascha Steffen, Daniel Streitz
SSRN Working Paper,
2021
Abstract
We use secondary corporate loan-market prices to construct a novel loan-market-based credit spread. This measure has considerable predictive power for economic activity across macroeconomic outcomes in both the U.S. and Europe and captures unique information not contained in public market credit spreads. Loan-market borrowers are compositionally different and particularly sensitive to supply-side frictions as well as financial frictions that emanate from their own balance sheets. This evidence highlights the joint role of financial intermediary and borrower balance-sheet frictions in understanding macroeconomic developments and enriches our understanding of which type of financial frictions matter for the economy.
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Trade Shocks, Labour Markets and Elections in the First Globalisation
Richard Bräuer, Wolf-Fabian Hungerland, Felix Kersting
Abstract
This paper studies the economic and political effects of a large trade shock in agriculture – the grain invasion from the Americas – in Prussia during the first globalisation (1871-1913). We show that this shock accelerated the structural change in the Prussian economy through migration of workers to booming cities. In contrast to studies using today’s data, we do not observe declining per capita income and political polarisation in counties affected by foreign competition. Our results suggest that the negative and persistent effects of trade shocks we see today are not a universal feature of globalisation, but depend on labour mobility. For our analysis, we digitise data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian trade data to isolate exogenous variation.
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14.09.2021 • 23/2021
Production bottlenecks delay recovery
The German recovery made good progress over the summer 2021. However, bottlenecks in sea transport and the production of intermediate goods are weighing on world trade. The rise in raw material prices has prompted inflation rates to spike, and an increase in new infections is clouding the outlook again. A weak final quarter is therefore to be expected. The Halle Institute for Economic Research (IWH) forecasts that German gross domestic product (GDP) will increase by 2.2% in 2021 and 3.6% in 2022 (East Germany: 1.8% and 2.8%).
Oliver Holtemöller
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Konjunktur aktuell: Produktionsengpässe verzögern Erholung
Konjunktur aktuell,
No. 3,
2021
Abstract
Im Sommer 2021 dürfte die weltwirtschaftliche Produktion deutlich zugelegt haben, aber Schließungen von Produktionsanlagen und Häfen vergrößern den Stau im globalen Warenaustausch. Ansteigende Rohstoffpreise schlagen sich v. a. in den USA und im Euroraum in hohen Inflationsraten nieder, doch die Notenbanken werden sich mit dem Kurswechsel Zeit lassen. Dadurch erhält die Wirtschaft in den westlichen Industrieländern weiter Rückenwind seitens der Wirtschaftspolitik. Die Erholung der deutschen Wirtschaft kam im Sommerhalbjahr dank der Impfkampagne und des privaten Konsums gut voran. Wegen steigender Corona-Neuinfektionen und Produktionsengpässen ist dennoch nur mit einem recht schwachen Jahresschlussquartal zu rechnen. Das BIP wird 2021 um 2,2% und 2022 um 3,6% zunehmen.
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07.09.2021 • 22/2021
IWH Bankruptcy Update: Ongoing Decline in Bankruptcy Statistics
After hitting an all-time low in July, the number of firms declaring bankruptcy in Germany fell yet again in August. A new low was also registered in the number of impacted jobs. These are the headline findings of the IWH Bankruptcy Report, published by the Halle Institute for Economic Research (IWH), which provides a monthly update on German bankruptcy statistics.
Steffen Müller
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Aspects of the Political Economy of the European Banking Union
Lena Tonzer
PolEconFin Initiative,
2021
Abstract
The regulatory architecture of the financial system has significantly changed after the global financial crisis of 2008/09. In Europe, the introduction of the Single Rulebook has been a major change and provides the legal foundation for the European Banking Union (EBU). The Single Rulebook consists of a regulation, the Capital Requirements Regulation (CRR), and three main directives targeting capital regulation and compensation of managers, harmonization of deposit insurance schemes, as well as resolution and restructuring rules (Capital Requirements Directive (CRD IV), Deposit Guarantee Schemes Directive (DGSD), Bank Recovery and Resolution Directive (BRRD)).
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A Comparison of Monthly Global Indicators for Forecasting Growth
Christiane Baumeister, Pierre Guérin
International Journal of Forecasting,
No. 3,
2021
Abstract
This paper evaluates the predictive content of a set of alternative monthly indicators of global economic activity for nowcasting and forecasting quarterly world real GDP growth using mixed-frequency models. It shows that a recently proposed indicator that covers multiple dimensions of the global economy consistently produces substantial improvements in forecasting accuracy, while other monthly measures have more mixed success. Specifically, the best-performing model yields impressive gains with MSPE reductions of up to 34% at short horizons and up to 13% at long horizons relative to an autoregressive benchmark. The global economic conditions indicator also contains valuable information for assessing the current and future state of the economy for a set of individual countries and groups of countries. This indicator is used to track the evolution of the nowcasts for the U.S., the OECD area, and the world economy during the COVID-19 pandemic and the main factors that drive the nowcasts are quantified.
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Executives with Customer Experience and Firm Performance in the B2B Context
Yiwei Fang, Cong Feng, Iftekhar Hasan, Jiong Sun
European Journal of Marketing,
No. 7,
2021
Abstract
Purpose:
This paper aims to examine the presence of an executive with customer experience (ECE) in a supplier firm’s top management team (TMT). The role of ECE presence remains understudied in the marketing literature. This study attempts to examine the relationship between ECE presence and firm performance.
Design/methodology/approach:
This paper draws on the resource-based view of the firm and adopts a panel firm fixed effects estimator to test the proposed hypotheses. The empirical analysis uses a sample of 1,974 firm-year observations with 489 unique supplier firms. Selection-induced endogeneity is mitigated through the Heckman procedure.
Findings:
ECE presence improves firm performance. Additionally, firms benefit less from ECE presence if a board member with customer experience (BCE) is also present, if a chief executive officer commands a higher pay slice (compared to other executives), and if a TMT is more functionally diversified. However, ECE presence is particularly beneficial if the overall economy is in contraction. Comparing the functional positions held by ECEs reveals that ECE in the marketing function (as a chief marketing officer) offers the largest benefit to an average supplier firm. ECE presence is also associated with other firm outcomes (e.g. bankruptcy odds, innovation and customer orientation).
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15.06.2021 • 16/2021
Increase in personal contacts spurs economic activity
This summer the economic outlook in Germany is bright. As the pandemic is in retreat, the restrictions that have hampered many service activities are likely to be gradually lifted, and a strong boost in private purchases can be expected. The Halle Institute for Economic Research (IWH) forecasts that gross domestic product will increase by 3.9% in 2021 and by 4.0% in 2022. Production in East Germany is expected to increase by 3% in both years, respectively.
Oliver Holtemöller
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