Alumni
IWH Alumni The IWH would like to stay in contact with its former employees. We...
See page
Financial Stability
Financial Systems: The Anatomy of the Market Economy How the financial system is...
See page
The New Europe
The new Europe The financial crisis is largely over, yet confidence in the ECB and EU...
See page
Trade, Misallocation, and Capital Market Integration
Laszlo Tetenyi
IWH-CompNet Discussion Papers,
No. 8,
2019
Abstract
I study how cross-country capital market integration affects the gains from trade in a model with financial frictions and heterogeneous, forward-looking firms. The model predicts that misallocation among exporters increases as trade barriers fall, even as misallocation decreases in the aggregate. The reason is that financially constrained productive exporters increase their production only marginally, while unproductive exporters survive for longer and increase their size. Allowing capital inflows magnifies misallocation, because unproductive firms expand even more, leading to a decline in aggregate productivity. Nevertheless, under integrated capital markets, access to cheaper capital dominates the adverse effect on productivity, leading to higher output, consumption and welfare than under closed capital markets. Applied to the period of European integration between 1992 and 2008, I find that underdeveloped sectors experiencing higher export exposure had more misallocation of capital and a higher share of unproductive firms, thus the data is consistent with the model’s predictions. A key implication of the model is that TFP is a poor proxy for consumption growth after trade liberalisation.
Read article
Firm-level Employment, Labour Market Reforms, and Bank Distress
Moritz Stieglitz, Ralph Setzer
ECB Working Paper Series,
No. 2334,
2019
Abstract
We explore the interaction between labour market reforms and financial frictions. Our study combines a new cross-country reform database on labour market reforms with matched firm-bank data for nine euro area countries over the period 1999 to 2013. While we find that labour market reforms are overall effective in increasing employment, restricted access to bank credit can undo up to half of long-term employment gains at the firm-level. Entrepreneurs without sufficient access to credit cannot reap the full benefits of more flexible employment regulation.
Read article
Contact
Contact Get a quick overview of how to reach us and whom to contact: Postal...
See page
Faculty
DPE Faculty A B C D E F G H I J...
See page
Mission Statement
The Halle Spirit We provide independent research on economic topics that really matter and aim to enrich society with facts and evidence-based insights that facilitate...
See page
Social Mobility
Social Mobility Equal opportunities for everyone Dossier ...
See page
PhD Graduates Financial Markets
PhD Graduates of the Department of Financial Markets Chris Becker: "Essays in...
See page
