Institutionelle Defizite und wachsende Spannungen in der Euro-Zone
Hubert Gabrisch
Wirtschaft im Wandel,
No. 7,
2007
Abstract
The introduction of the Euro was certainly a success. Nevertheless, behind this success one may find some increasing asymmetries and imbalances across member countries, which may undermine the stability of the common currency in the long run. Tensions include the paralysis of fiscal policy, increasing divergence in per capita income, a high volatility of real state prices, and diverging unit labour cost developments. The given forms of macroeconomic coordination seem not to be appropriate to mitigate the problems. Obviously, countries can compete with wage policy only after currencies and their exchange rates were abolished, and the use of fiscal policy has been restricted. In particular, Germany and Austria were successful in competitive wage policy, while countries like Spain, Greece, Portugal, Italy, and also France did not yet use the competitiveness channel. Germany was able to reduce its unit labour costs more than other countries by labour market reforms and higher indirect taxes in replacing social taxes. However, the advantage may proof to be temporary only, for other countries will be forced to follow the German example. Given an ECB inflation target of 2 %, more competitive wage policy in the Euro area might jeopardize the stability of the currency through deflation and higher unemployment. It does not wonder that the discussion on other and new forms of macroeconomic coordination revived recently. This debate does not only include the introduction of a central EU budget with anti-cyclical effects, but also forms of direct and indirect coordination of national wage policies. In any case, it would be useful to oblige national wage policies to obey the common interest of the Union.
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Mit 55 zum alten Eisen? Eine Analyse des Alterseinflusses auf die Produktivität anhand des LIAB
Lutz Schneider
Zeitschrift für Arbeitsmarktforschung,
No. 1,
2007
Abstract
"Against the background of an aging labor force in Germany and insufficient job opportunities for older people, the paper raises the question as to how age affects the productivity of workers. Due to opposite developments of certain human abilities across the life span, gerontological research supports the hypothesis of an inverted u-shaped age-productivity profile. Middle aged workers are supposed to achieve the highest productivity level, whereas both young and old employees should show lower productivity levels. The analysis is carried out on the basis of a new linked employer-employee dataset of the Institute for Employment Research (LIAB). Within a production function framework it is tested econometrically whether the age composition of a firm's workforce affects its productivity and if so in what way. The regressions are carried out separately for the manufacturing and the service sectors. The cross-section estimations of the year 2003 reveal a positive correlation between firm productivity and the share of middle-aged employees (35-44 years old). Furthermore, in the manufacturing sector, a negative correlation between productivity and the proportion of the youngest age group (15-24 years old) can be seen. Thus the results provide evidence of an inverted u-shaped age-productivity profile in this sector. In the service sector, in contrast, the share of the youngest workers seems to increase productivity compared to the reference group of the 55-64 year-old employees.
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Where enterprises lead, people follow? Links between migration and FDI in Germany
Claudia M. Buch, J. Kleinert, Farid Toubal
European Economic Review,
No. 8,
2006
Abstract
Standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Yet, these two assumptions are violated if agglomeration forces among factors from specific source countries are at work. Agglomeration implies that factors behave as complements and that the country of origin matters. This paper analyzes agglomeration between capital and labor empirically. We use state-level German data to answer the question whether and how migration and foreign direct investment (FDI) are linked. Stocks of inward FDI and of immigrants have similar determinants, and the geography of factor market integration matters. There are higher stocks of inward FDI in German states hosting a large foreign population from the same country of origin. This agglomeration effect is confined to higher-income source countries.
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Determinants and Effects of Foreign Direct Investment: Evidence from German Firm-Level Data
Claudia M. Buch, J. Kleinert, A. Lipponer
Economic Policy,
No. 41,
2005
Abstract
Foreign direct investment is an essential aspect of ‘globalization’ yet its empirical determinants are not well understood. What we do know is based either on poor data for a wide range of nations, or good data for the US and Swedish cases. In this paper, we provide evidence on the determinants of the activities of German multinational firms by using a newly available firm-level data set from the Deutsche Bundesbank. The specific goal of this paper is to demonstrate the relative role of country-level and firm-level determinants of foreign direct investment. We focus on three main questions: First, what are the main driving forces of German firms’ multinational activities? Second, is there evidence that sector-level and firm-level factors shape internationalization patterns? Third, is there evidence of agglomeration effects in the foreign activities of German firms? We find that the market access motive for internationalization dominates. Firms move abroad mainly to gain better access to large foreign markets. Cost-saving motives, however, are important for some manufacturing sectors. Our results strongly suggest that firm-level heterogeneity has an important influence on internationalization patterns – as stressed by recent models of international trade. We also find positive agglomeration effects for the activities of German firms that stem from the number of other German firms that are active on a given foreign market. In terms of lessons for economic policy, our results show that lowering barriers to the integration of markets and encouraging the formation of human capital can promote the activities of multinational firms. However, our results related to the heterogeneity of firms and agglomeration tendencies show that it might be difficult to fine-tune policies directed at the exploitation of synergies and at the creation of clusters of foreign firms.
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Why do banks hold capital in excess of regulatory requirements? A functional approach
Diemo Dietrich, Uwe Vollmer
IWH Discussion Papers,
No. 192,
2004
Abstract
This paper provides an explanation for the observation that banks hold on average a capital ratio in excess of regulatory requirements. We use a functional approach to banking based on Diamond and Rajan (2001) to demonstrate that banks can use capital ratios as a strategic tool for renegotiating loans with borrowers. As capital ratios affect the ability of banks to collect loans in a nonmonotonic way, a bank may be forced to exceed capital requirements. Moreover, high capital ratios may also constrain the amount a banker can borrow from investors. Consequently, the size of the banking sector may shrink.
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Competition Policy in Central Eastern Europe in the Light of EU Accession
Jens Hölscher
Journal of Common Market Studies,
No. 2,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Competition Policy in Central East Europe in light of EU Accession
Johannes Stephan
Journal of Common Market Studies,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Merger Control and Competition Policy in Central East Europe in view
Johannes Stephan
ICFAI Journal of International Business Law,
2003
Abstract
This study reviews the progress made in EU accession candidates with respect to competition policy. The analysis shows that institution building and legislation is well under way and that anti-trust practise is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based framework of the EU might not represent the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the “relevant market” in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of “vertical restraints”. The policy implications of this study suggest that the EU competition task force should take a rather proactive, case-by-case approach vis-à-vis its new members.
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IWH Economic Outlook 2003: Waiting for the Upswing in Germany - Waiting for Godot?
Wirtschaft im Wandel,
No. 1,
2003
Abstract
The outlook forecasts the economic developments in the world, the Euro Area and Germany in 2003. A general tendency is given for 2004. The world economy and the US-economy are recovering in 2003 and so are providing positive impulses for the Euro Area. For Germany this impetus from abroad will most likely remain the sole driving force for the revival of economic activity in 2003. Still this external stimulus will not be able to develop its full strength, as the newly restrictive fiscal policy will lower disposable income. At the earliest the economic upturn will gain strength in the summer months. This results in an initially increased burden on the labour market and only in 2004 will a decline in unemployment be observable, albeit at a slow pace. In economic terms, the recent interest rate cut by the ECB should only be able to show modest effects. Fiscal Policy in 2003 will be distinctly restrictive.
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Prospects for 2002: Waiting for the cyclical change
Wirtschaft im Wandel,
No. 1,
2002
Abstract
This article updates the complete analysis and forecast of the economic developments in the World and Germany in particular for 2002, as published in Summer. After six quarters of downturn, the beginning of 2002 does not show signs of a revival in economic activity. Neither internal nor external forces are currently strong enough to reverse the underlying downward trend. It is assumed that by spring time the recession in the USA will have faded. Resulting is a stimulus for the World Economy. This initiating impulse will revive production in Germany and the Euro Area, which by the second half of 2002 will gain pace. The increase in exports, as induced by the upturn in the US-Economy will positively affect domestic demand. With the usual time lag this development will also strengthen the job market. Monetary Policy will remain expansive and begins to show its full effect. Fiscal Policy, on the other hand, due to the need for consolidation, will remain restrictive.
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