An analysis of household electricity price developments in Germany since liberalization
Christian Growitsch, Felix Müsgens
External Publications,
2005
Abstract
Despite the liberalization of energy markets in 1998, household electricity prices in 2004 are nearly the same as 1998, indicating a failure of market restructuring. However, such a general consideration is misleading for two main reasons. Firstly, the price development shows significant differences among the stages of the value chain. Secondly, the underlying cost structure might have changed from 1998 to 2004. While such effects can be expected to level out over time, they can distort the comparison of a small period of observation. For these reasons, we analyzed the different price components at a detailed level, finding a considerable price reduction of about 32% in generation and a much lower reduction of 13% in transmission and distribution tariffs. These decreases have been mostly compensated by a significant increase in taxes and subsidies (+56%).
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The Impact of Technology and Regulation on the Geographical Scope of Banking
Hans Degryse, Steven Ongena
Oxford Review of Economic Policy,
No. 4,
2004
Abstract
We review how technological advances and changes in regulation may shape the (future) geographical scope of banking. We first review how both physical distance and the presence of borders currently affect bank lending conditions (loan pricing and credit availability) and market presence (branching and servicing). Next we discuss how technology and regulation have altered this impact and analyse the current state of the European banking sector. We discuss both theoretical contributions and empirical work and highlight open questions along the way. We draw three main lessons from the current theoretical and empirical literature: (i) bank lending to small businesses in Europe may be characterized both by (local) spatial pricing and resilient (regional and/or national) market segmentation; (ii) because of informational asymmetries in the retail market, bank mergers and acquisitions seem the optimal route of entering another market, long before cross-border servicing or direct entry are economically feasible; and (iii) current technological and regulatory developments may, to a large extent, remain impotent in further dismantling the various residual but mutually reinforcing frictions in the retail banking markets in Europe. We conclude the paper by offering pertinent policy recommendations based on these three lessons.
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Employment effects of development of renewable energies
Steffen Hentrich, Jürgen Wiemers, Joachim Ragnitz
IWH-Sonderhefte,
No. 1,
2004
Abstract
Die Bundesregierung strebt bis zum Jahr 2010 eine Verdopplung des Anteils erneuerbarer Energien am Primärenergie- sowie am Bruttostromverbrauch an. Das vorrangige Ziel der damit verbundenen Umstrukturierung des Energiesektors ist die Verbesserung der Umweltqualität. Es darf jedoch nicht außer Acht gelassen werden, dass die Förderung erneuerbarer Energien zwangsläufig auch gesamtwirtschaftliche Auswirkungen hat. Angesichts der anhaltend angespannten Lage am Arbeitsmarkt stehen dabei insbesondere die Beschäftigungseffekte der Förderung erneuerbarer Energien im Mittelpunkt des öffentlichen und wirtschaftspolitischen Interesses. Vor diesem Hintergrund hat das Institut für Wirtschaftsforschung Halle im Auftrag des Bundesministeriums für Wirtschaft und Arbeit (BMWA) die gesamtwirtschaftlichen und insbesondere beschäftigungsrelevanten Auswirkungen des angestrebten Ausbaus erneuerbarer Energien untersucht. Im Gegensatz zu anderen Studien dieser Art wurde dabei besonderer Wert auf eine dynamische Analyse gelegt, die neben den expansiven Beschäftigungsimpulsen im Bereich der erneuerbaren Energien auch die gegenläufigen Beschäftigungswirkungen berücksichtigt, die durch Verdrängung konventioneller Energieträger und durch erhöhte Steuern zur Finanzierung von Subventionen für regenerative Energien entstehen. Die vorliegende Untersuchung gibt eine zusammenfassende Darstellung der Vorgehensweise und der Ergebnisse des Forschungsprojekts. Es zeigt sich, dass per saldo durch den verstärkten Ausbau erneuerbarer Energien keine zusätzliche Beschäftigung generiert wird.
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Diversifikation und regionale Wirtschafts- und Beschäftigungsentwicklung - Eine empirische Analyse für ausgewählte deutsche Gebiete
Peter Haug
Jahrbuch für Regionalwissenschaft,
No. 2,
2004
Abstract
This article analyses the effects of heterogeneous economic structures on the long-term development of regional employment. A simple model is introduced to illustrate the beneficial outcomes for households as well as for enterprises of locating in highly diversified municipalities because risk (volatility of income, recruitment costs in a broader sense) diminishes for both. Econometric results for a sample of municipalities in Lower Saxony provide some evidence for a positive effect of local economic diversification on employment opportunities. The results seem to be not confined to the aggregated local labour demand but also apply to most branches the local business sector.
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Why do we have an interbank money market?
Jürgen Wiemers, Ulrike Neyer
IWH Discussion Papers,
No. 182,
2003
Abstract
The interbank money market plays a key role in the execution of monetary policy. Hence, it is important to know the functioning of this market and the determinants of the interbank money market rate. In this paper, we develop an interbank money market model with a heterogeneous banking sector. We show that besides for balancing daily liquidity fluctuations banks participate in the interbank market because they have different marginal costs of obtaining funds from the central bank. In the euro area, which we refer to, these cost differences occur because banks have different marginal cost of collateral which they need to hold to obtain funds from the central bank. Banks with relatively low marginal costs act as intermediaries between the central bank and banks with relatively high marginal costs. The necessary positive spread between the interbank market rate and the central bank rate is determined by transaction costs and credit risk in the interbank market, total liquidity needs of the banking sector, costs of obtaining funds from the central bank, and the distribution of the latter across banks.
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Enterprise-related services in East-Germany – an investigation of the service sector statistics
Siegfried Beer
Wirtschaft im Wandel,
No. 12,
2003
Abstract
According to the national accounts in East Germany, the enterprise-related services have developed substantielly since 1990. This is expressed by the average annual increase of real gross value added of 9.5% (GDP: 4.9%) until 2000. According to the newly introduced service sector statistics (for 2000), firms in the East German enterprise related services have on average 9 employes, and thus, they are only slightly smaller than enterprises in West-Germany. Much bigger differences appear with respect to the average sales and productivity (60% or 45%). Various explanations exist. One major reason obviously is, that enterprises in East-Germany make smaller sales because of the clearly smaller size of enterprises which demand these services. Furthermore the smaller earning power of services demanding enterprises, differences in the branch structur of enterprise related services, and administrative regulations for prices play a role.
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Explaining Investment Trends in European Union Countries
Klaus Weyerstraß
IWH Discussion Papers,
No. 174,
2003
Abstract
In the 1980s and, in particular, in the 1990s the countries of the European Union experienced divergent developments of gross fixed capital formation. Estimating an investment function for a panel of ten countries and analyzing the paths of the determinants of investment in the countries under consideration reveals that the different development of final demand is the main factor responsible for the divergences in investment. Other factors are disparities in the decline of real interest rates and of relative prices for capital goods.
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Recent Developments and Risks in the Euro Area Banking Sector
Reint E. Gropp, Jukka M. Vesala
ECB Monthly Bulletin,
2002
Abstract
This article provides an overview of euro area banks’ exposure to risk and examines the effects of the cyclical downturn in 2001. It describes the extent to which euro area banks’ risk profile has changed as a result of recent structural developments, such as an increase in investment banking, mergers, securitisation and more sophisticated risk management techniques. The article stresses that the environment in which banks operated in 2001 was fairly complex due to the relatively weak economic performance of all major economies as well as the events of 11 September in the United States. It evaluates the effects of these adverse circumstances on banks’ stability and overall performance. The article provides bank balance sheet information as well as financial market prices, arguing that the latter may be useful when assessing the soundness of the banking sector in a forward-looking manner. It concludes with a review of the overall stability of euro area banks, pointing to robustness in the face of the adverse developments in 2001 and the somewhat improved forward-looking indicators of banks’ financial strength in early 2002.
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Rating Agency Actions and the Pricing of Debt and Equity of European Banks: What Can we Infer About Private Sector Monitoring of Bank Soundness?
Reint E. Gropp, A. J. Richards
Economic Notes,
No. 3,
2001
Abstract
The recent consultative papers by the Basel Committee on Banking Supervision has raised the possibility of an explicit role for external rating agencies in the assessment of the credit risk of banks’ assets, including interbank claims. Any judgement on the merits of this proposal calls for an assessment of the information contained in credit ratings and its relationship to other publicly available information on the financial health of banks and borrowers. We assess this issue via an event study of rating change announcements by leading international rating agencies, focusing on rating changes for European banks for which data on bond and equity prices are available. We find little evidence of announcement effects on bond prices, which may reflect the lack of liquidity in bond markets in Europe during much of our sample period. For equity prices, we find strong effects of ratings changes, although some of our results may suffer from contamination by contemporaneous news events. We also test for pre-announcement and post-announcement effects, but find little evidence of either. Overall, our results suggest that ratings agencies may perform a useful role in summarizing and obtaining non-public information on banks and that monitoring of banks’ risk through bond holders appears to be relatively limited in Europe. The relatively weak monitoring by bondholders casts some doubt on the effectiveness of a subordinated debt requirement as a supervisory tool in the European context, at least until bond markets are more developed.
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Rising oil prices dampen upswing in Central and Eastern Europe
Axel Brüggemann
Wirtschaft im Wandel,
No. 16,
2000
Abstract
The article analyzes and forecasts the economic development in the Central and Eastern European transition economies. Due to the oil price effect and subsequently slower growth in the euro area, growth in transition economies will experience a slight setback too. On the whole however, it will reamin strong both in 2001 and in 2002. Accompaning the decrease in economic growth, the risk for financial crises in the region has increased.
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