Pre-announcement and Timing: The Effects of a Government Expenditure Shock
Alexander Kriwoluzky
European Economic Review,
No. 3,
2012
Abstract
An econometric strategy to identify a pre-announced fiscal policy shock is proposed. I show that the reduced form innovations can be recovered by estimating a Vector-moving-average model using the Kalman filter. The structural effects are identified exploiting the shock's pre-announced nature, which leads to potentially different signs of the responses of some endogenous variables during the announcement and after the realization of the shock. I illustrate my strategy by identifying a pre-announced shock to government consumption expenditures. I find that the response of private consumption is significantly negative on impact, rises and becomes significantly positive two quarters after the realization of the policy shock.
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The Performance of Short-term Forecasts of the German Economy before and during the 2008/2009 Recession
Katja Drechsel, Rolf Scheufele
International Journal of Forecasting,
No. 2,
2012
Abstract
The paper analyzes the forecasting performance of leading indicators for industrial production in Germany. We focus on single and pooled leading indicator models both before and during the financial crisis. Pairwise and joint significant tests are used to evaluate single indicator models as well as forecast combination methods. In addition, we investigate the stability of forecasting models during the most recent financial crisis.
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21 years old and a little bit more realistic?
Udo Ludwig
Deutschland Archiv – Zeitschrift für das vereinigte Deutschland,
2011
Abstract
East Germany`s development in the market economy shows ambiguous results. Although the re-structured economy proved itself to be growth orientated, the sustainable growth lead over the West German economy was attained only in the first half of the 1990s. Later on the catching up became smaller and smaller. Moreover employment recovered for the first time in the last upsw-ing before the global economic and financial crisis after the tremendous losses of jobs in the transitional period. Last but not least, as a result of low birth rates and emigration the shrinking number of inhabitants in East Germany could not be stopped. In the final analysis, long lasting repercussions of the inherited structures from GDR times are responsible for the backwardness of this region as well as the way of the economic transition in East Germany and regional differences in the settlements. Against this background the accomplishment of equal living standards in the eastern and western part of Germany should not be assessed in the light of medium per capita measures, but specified by comparisons between commensurable regions.
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Labor Demand During the Crisis: What Happened in Germany?
Claudia M. Buch
IZA. Discussion Paper No. 6074,
2011
Abstract
In Germany, the employment response to the post-2007 crisis has been muted compared to other industrialized countries. Despite a large drop in output, employment has hardly changed. In this paper, we analyze the determinants of German firms’ labor demand during the crisis using a firm-level panel dataset. Our analysis proceeds in two steps. First, we estimate a dynamic labor demand function for the years 2000-2009 accounting for the degree of working time flexibility and the presence of works councils. Second, on the basis of these
estimates, we use the difference between predicted and actual employment as a measure of labor hoarding as the dependent variable in a cross-sectional regression for 2009. Apart from total labor hoarding, we also look at the determinants of subsidized labor hoarding through short-time work. The structural characteristics of firms using these channels of adjustment differ. Product market competition has a negative impact on total labor hoarding but a positive effect on the use of short-time work. Firm covered by collective agreements hoard less labor overall; firms without financial frictions use short-time work less intensively.
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Africa and the Global Financial Crisis - Impact on Economic Reform Processes
R. Adelou Alabi, J. Alemazung, Achim Gutowski, Robert Kappel, Tobias Knedlik, O. Osnachi Uzor, Karl Wohlmuth, Hans H. Bass
African Development Perspectives Yearbook, Vol. 15,
2011
Abstract
In volume XV of the African Development Perspectives Yearbook, the Research Group on African Development Perspectives investigates the impact of the GFC on economic reform processes in Africa. The analysis is structured in such a way so as to reflect the opportunities and dangers of policy reversals in the face of the GFC. The impact of the crisis on different types and forms of governance in the region is considered. The first question is therefore which macro-economic policy instruments have to be applied in order to overcome the crisis and to continue with sustainable development. The second question is how the GFC has affected Africa's external economic relations and if the path of opening up to the world markets is continued. The third question raised is how the crisis has affected social cohesion, impacted on poverty alleviation strategies and the achievement of Millennium Development Goals (MDGs). All these questions are discussed in the various contributions which comprise general studies and country case studies. The authors also looked into the role of international financial institutions during and after the crisis. The volume XV of the African Development Perspectives Yearbook is structured into three Units. Unit 1 addresses general issues regarding the impact of the GFC on reform processes in Africa. Unit 2 presents case studies from countries and sub-regions. Unit 3 presents reviews and book notes of current literature focusing on issues of African development perspectives.
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Vigorous upswing continues
Wirtschaft im Wandel,
No. 3,
2011
Abstract
The worldwide upswing has gained momentum since last autumn. The main cause for the high growth dynamics is a monetary policy that is very expansive not only in advanced economies, where the utilization rates for production capacities are mostly still low, but also in emerging market economies that in general have already recovered from the Great Recession.
The German economy participates in the worldwide upswing. Here the recovery is ahead of those in most other advanced economies. Both exports and domestic demand are strongly expanding. One reason for the high growth dynamics is that key interest rates are particularly low for Germany, as the ECB has to take into account that many euro area economies are much more fragile. In addition, Germany still benefits from the wage moderation and the labour market reforms in the past decade: employment is expanding strongly, and firms find many profitable investment projects.
Major risks for this forecast are structural problems of some advanced economies that had become visible during the Great Recession and are still unresolved (concerning the US housing market and the crisis of confidence in the fiscal sustainability of some euro area countries in particular). A further risk is the possibility of further oil price hikes due to political instability in North Africa and the Middle East.
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Ageing and Labour Markets: An Analysis on the effect of worker’s age on productivity, innovation and mobility
Lutz Schneider
Technische Universität Dresden. Dissertation,
2011
Abstract
The present study analyses the labour market effect of workers’ ageing. Explicitly, the impact of age on productivity and wages, on innovation as well as on mobility is explored empirically. The econometric analyses are based on firm and employment data from the Institute for Employment Research (IAB) and, thus, refer to the labour market of Germany. Regarding the productivity and wage effects of age the econometric results confirm a positive correlation between firm productivity and the share of middle-aged employees (41-50 years old) within the manufacturing sector. Hence, the results provide evidence of an inverted u-shaped age-productivity profile in this sector also found for other countries. Furthermore, age-wage and age-productivity profiles seem to follow unequal patterns. Compared to the group of the 15-30 and the 51 and above years old workers the group of middle-aged employees earn less than a productivity based wage scheme would require. In terms of age effects on innovativeness the micro-econometric analysis again reveals an inverted u-shaped profile. Workers aged around 40 years seem to act as key driver for innovation activities within firms. An additional finding concerns the impact of age diversity on innovation. The expected positive effect of a heterogeneous age structure is not confirmed by the data. With respect to labour market mobility results are in favour of a negative correlation between age and job mobility either in terms of changing professions or firms. The estimation of a multi equation model verifies that expected wages of older workers do not or only marginally increase due to job mobility, so, financial incentives to change jobs are very low. Yet, even after controlling the absent wage incentive older employees still remain more immobile than younger workers. Altogether, these results should not only be of academic interest but also informative for actors on the firm and the governmental level. Both sides are asked to cope with the challenges of demographic change. Only by maintaining productivity and innovativeness until old ages the necessary resources can be generated to preserve an economy’s prosperity even if the share of non-active population is increasing by demographic developments. Secondly, enhancing productivity is essential to ensure employability of older persons and to sustain the size of workforce even in the circumstances of an ageing economy.
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Die Entwicklung der Corporate Governance deutscher Banken seit 1950
R. H. Schmidt, Felix Noth
Bankhistorisches Archiv,
No. 2,
2011
Abstract
The present paper gives an overview of the development of Corporate Governance of German banks since the 1950s. The focus will be on economic analysis. The most striking changes in Corporate Governance occurred with the ownership structure of commercial banks, in particular with the major joint-stock banks. In addition to that, the capital market has become a core element of Corporate Governance in all major German banks, which have replaced their prior concentration on the interests of a broadly defined circle of stakeholders by a one-sided concentration on shareholders’ interests. In contrast, with savings banks and cooperative cooperative banks, Corporate Governance has remained unchanged for the most part. Exceptions to this are the regional state banks: in their case, after they had turned away from traditional business models and in particular following the discontinuation of the guarantee obligation, the problems of their Corporate Governance, which were already discernible beforehand, became quite obvious. If you include the financial crisis, beginning in 2007, in the analysis, it becomes evident that it was precisely a Corporate Governance unilaterally geared to shareholders’ interest and the efficiency of the capital market that materially contributed to the evolution and widening of the crisis.
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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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Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective
Diemo Dietrich, Björn Jindra
International Business Review,
2010
Abstract
The aim of this paper is to bring economics-based finance research more into the focus of international business theory. On the basis of an analytical model that introduces financial constraints into incomplete contracting in an international vertical trade relationship, we propose an integrated framework that facilitates the study of the interdependencies between internalisation decisions, firm-internal allocations of control rights, and the debt capacity of firms. We argue that the financial constraint of an MNE and/or its supplier should be considered as an important determinant of internal governance structures, complementary to, and interacting with, institutional factors and proprietary knowledge.
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