Works Councils and Separations: Voice, Monopoly, and Insurance Effects
Boris Hirsch, Thorsten Schank, Claus Schnabel
Industrial Relations,
No. 4,
2010
Abstract
Using a large linked employer–employee data set for Germany, we find that the existence of a works council is associated with a lower separation rate to employment, in particular for workers with low tenure. While works council monopoly effects show up in all specifications, clear voice effects are only visible for low tenured workers. Works councils also reduce separations to nonemployment, and this impact is more pronounced for men. Insurance effects only show up for workers with tenure of more than 2 years. Our results indicate that works councils to some extent represent the interests of a specific clientele.
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German Economy Recovers Surprisingly Quickly from Last Year’s Recession
Wirtschaft im Wandel,
No. 9,
2010
Abstract
The German economy recovers surprisingly quickly from last year’s recession. For this year, we expect GDP to grow by 3.5%. Next year, when GDP growth should reach a rate of 2%, the general government deficit is likely to fall below the 3% mark of the Stability and Growth pact – if the government indeed realizes the stabilization program it decided on this summer. Unemployment will continue to decline.
We see three main causes for this favorable development: first, the German economy benefits strongly from the high growth dynamics in emerging markets, since German firms are well positioned for producing investment goods that are particularly sought-after in these countries. Second, growing demand for labor in Germany means that employment and labor income is on the rise. Partly, this is the reward for a long time of low wage rises that have made labor in Germany competitive again. Third, the expansive monetary policy in the euro area is particularly stimulating since here debt levels of private households and firms are moderate and therefore do not dampen the stimulating effects of low interest rates, as they do in many euro area partner countries with highly indebted private and public agents.
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A First Look on the New Halle Economic Projection Model
Sebastian Giesen, Oliver Holtemöller, Juliane Scharff, Rolf Scheufele
Abstract
In this paper we develop a small open economy model explaining the joint determination of output, inflation, interest rates, unemployment and the exchange rate in a multi-country framework. Our model – the Halle Economic Projection Model (HEPM) – is closely related to studies recently published by the International
Monetary Fund (global projection model). Our main contribution is that we model the Euro area countries separately. In this version we consider Germany and France, which represent together about 50 percent of Euro area GDP. The model allows for country specific heterogeneity in the sense that we capture different adjustment patterns to economic shocks. The model is estimated using Bayesian techniques. Out-of-sample and pseudo out-of-sample forecasts are presented.
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Concerning the development of the debt level of the New Länder since the German unification
Sabine Freye
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 2 -
2010
Abstract
During the 1990s, public indebtedness rose remarkably in all German political subdivisions. This development was particularly strong in the New Länder. At the beginning of the 1990s, they had low indebtedness rates. Today, 20 years later, the debt level of some New Länder lies over the average value of all Federal states. The background of this development is complex and depends also on the individual situation of each state. Generally, the rise of the debt level of the New Länder can be attributed to the 1990s’ estimation of a fast adjustment of the New Länder’s economic and financial power to that of the old Federal states. From today's point of view, this estimation was too optimistic. Furthermore, the New Länder have been affected differently by the transformation-conditioned structural change and the therefore arising difficulties with the necessary adjustment to the market.
In Saxony-Anhalt, which is characterised by the highest debt level of the New Länder, the collapse of the basic industry has led to high regional unemployment and to a substantial migration of the population. Still Saxony-Anhalt has countrywide the largest negative migration balance.
Regardless of these state-specific characteristics of the transformation process, there is a gradual change in the attitude towards existing debts and their handling, starting around the year 2000. So, the interest in budget consolidation increases constantly. This development was supported by the economic boom of the years 2006 and 2007. At present, the economic crisis puts the consolidation efforts of the states to the test.
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Macroeconomic Shocks and Banks' Foreign Assets
Claudia M. Buch, K. Carstensen, A. Schertler
Journal of Money, Credit and Banking,
No. 1,
2010
Abstract
Recent developments in international financial markets have highlighted the role of banks in the transmission of shocks across borders. We employ dynamic panel methods for a sample of OECD countries to analyze whether banks' foreign assets react to macroeconomic shocks at home and abroad. We find that banks reduce their foreign assets in response to a relative increase in domestic interest rates, and they increase their foreign assets when the growth rate of world energy prices rises. The responses are characterized by a temporal overshooting and a dynamic adjustment process that extends over several quarters.
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The ADR Shadow Exchange Rate as an Early Warning Indicator for Currency Crises
Stefan Eichler, Alexander Karmann, Dominik Maltritz
Journal of Banking and Finance,
No. 11,
2009
Abstract
We develop an indicator for currency crisis risk using price spreads between American Depositary Receipts (ADRs) and their underlyings. This risk measure represents the mean exchange rate ADR investors expect after a potential currency crisis or realignment. It makes crisis prediction possible on a daily basis as depreciation expectations are reflected in ADR market prices. Using daily data, we analyze the impact of several risk drivers related to standard currency crisis theories and find that ADR investors perceive higher currency crisis risk when export commodity prices fall, trading partners’ currencies depreciate, sovereign yield spreads increase, or interest rate spreads widen.
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Inflation Expectations: Does the Market Beat Professional Forecasts?
Makram El-Shagi
IWH Discussion Papers,
No. 16,
2009
Abstract
The present paper compares expected inflation to (econometric) inflation forecasts
based on a number of forecasting techniques from the literature using a panel of
ten industrialized countries during the period of 1988 to 2007. To capture expected
inflation we develop a recursive filtering algorithm which extracts unexpected inflation from real interest rate data, even in the presence of diverse risks and a potential Mundell-Tobin-effect.
The extracted unexpected inflation is compared to the forecasting errors of ten
econometric forecasts. Beside the standard AR(p) and ARMA(1,1) models, which
are known to perform best on average, we also employ several Phillips curve based approaches, VAR, dynamic factor models and two simple model avering approaches.
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