12.12.2019 • 24/2019
Global economy slowly gains momentum – but Germany still stuck in a downturn
In 2020, the global economy is likely to benefit from the recent thaw in trade disputes. Germany’s manufacturing sector, however, will recover only slowly. “In 2020, the German economy will probably grow at a rate of 1.1%, and adjusted for the unusually high number of working days the growth rate will only be 0.7%”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at Halle Institute for Economic Research (IWH). With an estimated growth rate of 1.3%, production in East Germany will outpace total German production growth.
Oliver Holtemöller
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What Drives the Commodity-Sovereign-Risk-Dependence in Emerging Market Economies?
Hannes Böhm, Stefan Eichler, Stefan Gießler
IWH Discussion Papers,
No. 23,
2019
Abstract
Using daily data for 34 emerging markets in the period 1994-2016, we find robust evidence that higher export commodity prices are associated with higher sovereign bond returns (indicating lower sovereign risk). The economic effect is especially pronounced for heavy commodity exporters. Examining the drivers, we find, first, that commodity-dependence is higher for countries that export large volumes of volatile commodities and that the effect increases in times of recessions, high inflation, and expansionary U.S. monetary policy. Second, the importance of raw material prices for sovereign financing can likely be mitigated if a country improves institutions and tax systems, attracts FDI inflows, invests in manufacturing, machinery and infrastructure, builds up reserve assets and opens capital and trade accounts. Third, the concentration of commodities within a country’s portfolio, its government indebtedness or amount of received development assistance appear to be only of secondary importance for commodity-dependence.
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02.10.2019 • 21/2019
Thanks to robust domestic demand, the impact of the manufacturing sector on East Germany is less severe than in the west – Implications of the Autumn 2019 Joint Economic Forecast and official regional data for the eastern German economy
In its autumn report, the Joint Economic Forecast Project Group states that the German economy has cooled further in the current year. The manufacturing sector is the main reason for the economic weakness. This affects the economy in East Germany as well.
Oliver Holtemöller
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19.09.2019 • 19/2019
Long-term effects of privatisation in eastern Germany: award-winning US economist begins large-scale research project at the IWH
It is one of the most prestigious awards in the German scientific community: the Max Planck-Humboldt Research Award 2019 endowed with €1.5 million goes to Ufuk Akcigit, Professor of Economics at the University of Chicago. At the Halle Institute for Economic Research (IWH), Akcigit aims to use innovative methods to investigate why the economy in eastern Germany is still lagging behind that in western Germany – and what role the privatisation process 30 years ago played in this.
Reint E. Gropp
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05.09.2019 • 18/2019
Downturn in Germany continues
Trade disputes are causing international trade in goods to decline this year. The manufacturing industry in Germany is particularly affected by this. However, a robust labour market is supporting the economy. According to IWH autumn economic forecast, German gross domestic product (GDP) will increase by 0.5% in 2019. At 1%, output growth in East Germany is likely to be significantly higher than in West Germany.
Oliver Holtemöller
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What Drives Discretion in Bank Lending? Some Evidence and a Link to Private Information
Gene Ambrocio, Iftekhar Hasan
Journal of Banking & Finance,
2019
Abstract
We assess the extent to which discretion, unexplained variations in the terms of a loan contract, has varied across time and lending institutions and show that part of this discretion is due to private information that lenders have on their borrowers. We find that discretion is lower for secured loans and loans granted by a larger group of lenders, and is larger when the lenders are larger and more profitable. Over time, discretion is also lower around recessions although the private information content is higher. The results suggest that bank discretionary and private information acquisition behavior may be important features of the credit cycle.
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26.06.2019 • 14/2019
Study: How financial crises lower life satisfaction and how to prevent this
Financial crises not only result in severe disruptions to the economic system, they also affect people’s life satisfaction. A new study by Martin Luther University Halle-Wittenberg (MLU) and the Halle Institute for Economic Research (IWH) shows that weaker members of society are more affected by increased uncertainty during crisis times, even if they may not be speculating on the stock market themselves. This could potentially also lower their propensity to consume, thereby intensifying the impact of a financial crisis. The study was recently published in “The B.E. Journal of Economic Analysis & Policy”.
Lena Tonzer
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What Does Peer-to-Peer Lending Evidence Say About the Risk-taking Channel of Monetary Policy?
Yiping Huang, Xiang Li, Chu Wang
IWH Discussion Papers,
No. 14,
2019
Abstract
This paper uses loan application-level data from a Chinese peer-to-peer lending platform to study the risk-taking channel of monetary policy. By employing a direct ex-ante measure of risk-taking and estimating the simultaneous equations of loan approval and loan amount, we are the first to provide quantitative evidence of the impact of monetary policy on the risk-taking of nonbank financial institution. We find that the search-for-yield is the main workhorse of the risk-taking effect, while we do not observe consistent findings of risk-shifting from the liquidity change. Monetary policy easing is associated with a higher probability of granting loans to risky borrowers and a greater riskiness of credit allocation, but these changes do not necessarily relate to a larger loan amount on average.
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13.06.2019 • 12/2019
Weak foreign demand – economic downturn in Germany
In the summer of 2019, uncertainty due to ongoing trade disputes weighs on the global economy. The export-oriented German economy is particularly affected. According to IWH summer economic forecast, gross domestic product is expected to increase by only 0.5% in 2019; the forecast for East Germany is 0.8%. The German labour market remains largely robust despite the economic downturn.
Oliver Holtemöller
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What Does Peer-to-Peer Lending Evidence Say About the Risk-taking Channel of Monetary Policy?
Yiping Huang, Xiang Li, Chu Wang
CESifo Area Conferences 2019 Series: Macro, Money and International Finance,
2019
Abstract
This paper uses loan application-level data from a peer-to-peer lending platform to study the risk-taking channel of monetary policy. By employing a direct ex-ante measure of risk-taking and estimating the simultaneous equations of loan approval and loan amount, we are the first to provide quantitative evidence of the impact of monetary policy on the risk-taking of nonbank financial institution. We find that the search-for-yield is the main workhorse of the risk-taking effect, while we do not observe consistent findings of risk-shifting from the liquidity change. Monetary policy easing is associated with a higher probability of granting loans to risky borrowers and a greater riskiness of credit allocation, but these changes do not necessarily relate to a larger loan amount on average.
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