What Drives the Commodity-Sovereign-Risk-Dependence in Emerging Market Economies?
Hannes Böhm, Stefan Eichler, Stefan Gießler
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.
Read article
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
Read press release
Fehlende Fachkräfte in Deutschland – Unterschiede in den Betrieben und mögliche Erklärungsfaktoren: Ergebnisse aus dem IAB-Betriebspanel 2018
Eva Dettmann, Daniel Fackler, Steffen Müller, Georg Neuschäffer, Viktor Slavtchev, Ute Leber, Barbara Schwengler
IAB-Forschungsbericht 10/2019,
2019
Abstract
In the years after the economic crisis, the economic situation of establishments in West and East Germany has improved steadily. At the same time, increased labor market dynamics and a positive trend in total employment can be observed. Also the demand for skilled employees reached a new high of 2.7 million in 2018. Only about 60 percent of the demand could be covered, which is also reflected in a further increase of the so-called non-occupancy quota. With regard to the distribution of this indicator for skilled labor shortages, we observe clear sector- and size-specific differences as well as regional heterogeneity. The quota is particularly high in the construction industry and in agriculture and forestry, with more than half the positions left vacant. A positive correlation between shortages of skilled labor and the use of temporary work, flexible working hours and investments in vocational training and further education is assessed in a multivariate analysis. The structure of formal occupational skill requirements did not change very much over recent years. However, a clear trend towards more flexible work organization can be observed. For example, about one quarter of the establishments offer teleworking. The share of part-time employment is also increasing nationwide, especially in sectors with a higher proportion of women, such as the service industries or the public sector. The share of marginal employment is particularly high in sectors that are characterized by cyclical and/or seasonal demand fluctuations or comparatively unspecific skill requirements – and above-average shortages of skilled labor. In 2018, the proportion of establishments authorized to provide in-house vocational training rose for the first time since 2010 – to 54 percent in Germany. In Eastern Germany, the share is significantly lower at 49 percent. The proportion of authorized establishments that actually train apprentices has been relatively stable at around 50 percent for several years. Both successfully occupied and vacant apprenticeships are distributed very heterogeneously across sectors. The recruitment rate of successful graduates is about three quarters. In establishments with skilled labor shortages, both the training rate and the graduate hiring rate are higher, suggesting that vocational training is already used here as an alternative strategy for recruiting skilled employees. The share of establishments supporting further education of their employees remains stable at about fifty percent for several years, and the proportion of employees participating in training is still about one third. A comparatively higher rate of further education among unskilled employees in establishments with skilled labor shortages indicates that internal resources are being increasingly used here to meet the demand for skilled employees.
Read article
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
Read press release
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
Read press release
What Drives Discretion in Bank Lending? Some Evidence and a Link to Private Information
Gene Ambrocio, Iftekhar Hasan
Journal of Banking and 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.
Read article
Corporate Misconduct and the Cost of Private Debt: Evidence from China
Xian Gu, Iftekhar Hasan, Haitian Lu
Comparative Economic Studies,
No. 3,
2019
Abstract
Using a comprehensive dataset of corporate lawsuits in China, we investigate the implications of corporate misconduct on the cost of private debt. Evidence reveals that firms involved in litigations obtain subsequent loans with stricter pricing terms, 15.1 percent higher loan spreads, than non-litigated borrowers. Strong political connection and repeated relationship help to flatten the sensitivity of loan pricing to litigation. Nonbank financial institutions react in stronger manner to corporate misconduct than traditional banks in pricing loans. Overall, we show that private debt holders care about borrowers’ wrongdoing in the past.
Read article
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
Read press release
What Does Peer-to-Peer Lending Evidence Say About the Risk-taking Channel of Monetary Policy?
Yiping Huang, Xiang Li, Chu Wang
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.
Read article
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
Read press release
