The German Upswing Takes a Break
Wirtschaft im Wandel,
2. Sonderausgabe
2007
Abstract
The world economy continues to expand healthily, but risks have increased during summer. The crisis of the housing sector in the US has deepened: A revaluation of mortgage backed assets has triggered turbulences on global financial markets. The institutes expect that financial markets will calm down during the coming months, but that the downswing in the US will slow the pace of the world economy. The economy in the euro area will, in addition, be dampened by the appreciation of the euro. The German economy is, in spite of a restrictive fiscal policy, in a robust upswing. Because wage setting and inflation continues to be moderate, there will be no need for a restrictive monetary policy. Thus the German economy will, due to slower demand from the US and higher costs of financing, lose momentum, but chances are good that the upswing will only take a break. In the coming year private consumption is expected to be the main contributor to growth, because wage incomes will expand strongly. Unemployment will continue to shrink, albeit at a smaller rate than during 2007. Fiscal policy will no longer be restrictive. Economic policy has improved the conditions for growth in Germany; there is, however, still much to do. Public finances have to be consolidated further, but at the same time, public investment has to be strengthened. This can be achieved if public consumptive expenditure growth is limited. The institutes suggest to increase public expenditure by 2% per annum over the cycle in nominal terms; this is, by less than by the trend growth rate of nominal GDP.
The institutes advise against a reversal of the recent labour market reforms. Instead, incentives for taking up jobs should be increased further.
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Asset Tangibility and Capital Allocation within Multinational Corporations
Diemo Dietrich
IWH Discussion Papers,
No. 4,
2006
Abstract
We investigate capital allocation across a firm's divisions that differ with respect to the degree of asset tangibility. We adopt an incomplete contracting approach where the outcome of potential debt renegotiations depends on the liquidation value of assets. However, with diversity in terms of asset tangibility, liquidation proceeds depend on how funds have been allocated across divisions. As diversity can be traced back to institutional differences between countries, we provide a rationale for multidivisional decision- making in an international context. A main finding is that multinationals may be bound to go to certain countries when financiers cannot control the capital allocation.
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Die Bedeutung interner Kapitalmärkte für die Organisationsform von Unternehmen
Diemo Dietrich
WiSt - Wirtschaftswissenschaftliches Studium,
2006
Abstract
Contemporary financial economics has broken new grounds when considering that firms typically have not only a single investment opportunity available conducted by a single manager. A Firm has in fact several projects where headquarters delegates the undertaking to project managers. From this perspective, what conclusions can be drawn regarding the functioning of capital markets? What role do internal capital markets play? What consequences does it have for the borders of a firm?
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How do multinationals meet investment decisions: The case study of General Motors
Diemo Dietrich, Daniel Höwer
Wirtschaft im Wandel,
No. 10,
2005
Abstract
The recent events around Opel, the German subsidiary of General Motors, has attracted a great deal of attention, especially with respect to the influence of multinational corporations on the German economy. General Motors' announcement of an internal competition for production capacities in June 2004 has led some observers to the assessment that this would be a step towards more efficiency and profitability. But such internal competition for ressources may be hampered and end up in inefficiency. This is because informational frictions and enforcement problems within a corporation restrict the headquarters ability and willingness to allocate ressources efficiently. Against this background, we discuss possible problems associated with the internal capital allocation within multinational corporations and show their relevance in the case of General Motors.
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Market Indicators, Bank Fragility, and Indirect Market Discipline
Reint E. Gropp, Jukka M. Vesala, Giuseppe Vulpes
Economic Policy Review,
No. 2,
2004
Abstract
A paper presented at the October 2003 conference “Beyond Pillar 3 in International Banking Regulation: Disclosure and Market Discipline of Financial Firms“ cosponsored by the Federal Reserve Bank of New York and the Jerome A. Chazen Institute of International Business at Columbia Business School.
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Exporting Financial Institutions Management via Foreign Direct Investment Mergers and Acquisitions
Allen N. Berger, Claudia M. Buch, G. DeLong
Journal of International Money and Finance,
No. 3,
2004
Abstract
We test the relevance of the new trade theory and the traditional theory of comparative advantage for explaining the geographic patterns of international M&As of financial institutions between 1985 and 2000. The data provide statistically significant support for both theories. We also find evidence that the U.S. has idiosyncratic comparative advantages at both exporting and importing financial institutions management.
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Women´s attitudes towards employment and to employment and family
Andrea Besenthal, Cornelia Lang
Wirtschaft im Wandel,
No. 1,
2004
Abstract
In East and West Germany women’s labour participation differs despite extensively harmonised institutional parameters since Reunification. In West Germany the number of working women rose in recent years; In East Germany women’s employment rate fell slightly while still remaining on a rather high level. These regional distinctions can be explained by the different employment patterns in the GDR and former FRG. In addition the varying financial household situations and different supply with child care facilities play a major role.
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The State of the World Economy and the German Economy in Fall of 2003 - Report of the six economic research institutes
Wirtschaft im Wandel,
No. 14,
2003
Abstract
Growth of total world output has accelerated since last spring. The factors that had dampened growth during the early months of 2003 have lapsed, economic policy continues to be stimulating and the assessment of the prospects has become more favourable. The recovery is led once again by the United States. Developments in Japan are surprisingly good and the phase of weakness in Southeast Asia has been overcome. Whereas output in the EU accession countries has continued to grow strongly, the euro area has remained mired in stagnation....
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Empirical methods for analysising the risks of financial crises
Axel Brüggemann, Thomas Linne
IWH-Sonderhefte,
No. 3,
2003
Abstract
he vulnerability against financial crises of EU candidate countries and other Central and East European countries is on the agenda of the Institute for Economic Research Halle. Research concentrates on the developing of effective early warning indicators and includes a strong orientation on quantitative methods. This volume presents selected methods for the analyse of financial fragility. The finding complete the signals approach, which is used by the IWH for routine checks of the risk potential of EU candidate an other countries of the region. The four studies presented here were written by the scientific staff of the IWH and by guest researchers. Their objective is to deepen insights into selected problems of financial fragility by using alternative methods.
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Supraregional sales markets: Development chances for companies in the East German manufacturing sector
Brigitte Loose, Udo Ludwig
Wirtschaft im Wandel,
No. 16,
2001
Abstract
In this paper the export activities of the East German manufacturing industry are studied where exports are defined in a broad sense including both sales abroad and in West Germany. Survey data for 1998 and 1999 are used to reveal the relationship between technical as well as institutional characteristics of the companies and their exports. The following questions are discussed: Which companies participate in the export activities? What are the main regions of their business? Which in-house factors influence the export activities? What are the financial outcomes for the companies engaged in exports? Hypotheses are built on the basis of the market transaction costs theory. Bivariate and multivariate approaches are applied. The data are taken from the “Establishment Panel” of the Institute for Employment Research at the Federal Employment Services (IAB) in Nuremberg (Germany).
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