What Happened to the East German Housing Market? A Historical Perspective on the Role of Public Funding
Claus Michelsen, Dominik Weiß
Post-Communist Economies,
2010
Abstract
The paper analyses the development of the East German housing market after the reunification of the former German Democratic Republic and the Federal Republic of Germany in 1990. We analyse the dynamics of the East German housing market within the framework of the well-known stock-flow model, proposed by DiPasquale and Wheaton. We show that the today observable disequilibrium to a large extend is caused by post-unification housing policy and its strong fiscal incentives to invest into the housing stock. Moreover, in line with the stylized empirical facts, we show that ‘hidden reserves’ of the housing market were reactivated since the economy of East Germany became market organized. Since initial undersupply was overcome faster than politicians expected, the implemented fiscal stimuli were too strong. In contrast to the widespread opinion that outward migration caused the observable vacancies, this paper shows that not weakness of demand but supply side policies caused the observable disequilibrium.
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What Determines the Innovative Success of Subsidized Collaborative R&D Projects? – Project-Level Evidence from Germany –
Michael Schwartz, François Peglow, Michael Fritsch, Jutta Günther
IWH Discussion Papers,
No. 7,
2010
published in: Technovation
Abstract
Systemic innovation theory emphasizes that innovations are the result of an interdependent exchange process between different organizations. This is reflected in the current paradigm in European innovation policy, which aims at the support of collaborative R&D and innovation projects bringing together science and industry. Building on a large data set using project-level evidence on 406 subsidized R&D cooperation projects, the present paper provides detailed insights on the relationship between the innovative success of R&D cooperation projects and project characteristics. Patent applications and publications are used as measures for direct outcomes of R&D projects. We also differentiate between academic-industry projects and pure inter-firm projects. Main results of negative binomial regressions are that large-firm involvement is positively related to pa-tent applications, but not to publications. Conversely, university involvement has positive effects on project outcomes in terms of publications but not in terms of patent applications. In general, projects’ funding is an important predictor of innovative success of R&D cooperation projects. No significant results are found for spatial proximity among cooperation partners and for the engagement of an applied research institute. Results are discussed with respect to the design of R&D cooperation support schemes.
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20 years of innovation policy in East Germany – from a pure “survival support” to high-tech subsidy
Jutta Günther, Nicole Nulsch, Katja Wilde
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 2 -
2010
Abstract
The article uses the occasion of “20 years German re-unification” in order to provide an overview of the range of innovation policy schemes in East Germany with the intention to identify changing patterns or paradigms in its philosophy and priorities over time. In general, innovation policy schemes aim at increasing research and development (R&D) activities of companies in order to strengthen their competitiveness as market incentives for R&D are usually too low (problem of market failure). However, in East Germany in the early 1990s the situation was different. At the very beginning, the transformation process in East Germany was accompanied by innovation policy schemes that aimed at the pure maintenance of industrial research and the stock of R&D personnel since the potential for innovation was at a risk to be eliminated completely. In the late 1990s the intention of innovation policies changed. Instead of financial support primarily for human resources, innovation policy schemes since then focused on the support of cooperation projects between different research entities (companies and scientific organizations) and, later on, also the setup of networks in order to close the economic differences between East and West Germany.
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International Banking and Liquidity Allocation: Cross-border Financial Services versus Multinational Banking
Diemo Dietrich, Uwe Vollmer
Journal of Financial Services Research,
2010
Abstract
This paper explores the comparative advantage of multinational banking over cross-border financial services in terms of capitalizing on a global access to funding sources. We argue that this advantage depends on the benefit and the cost of multinational banks' intimacy with local markets. The benefit is that it allows multinational banks to create more liquidity. The cost is that it causes inefficiencies in internal capital markets, on which a bank relies to allocate liquidity across countries. We analyze the conditions under which multinational banking is then likely to arise and show that capital requirements have an effect as they influence the degree of inefficiency in internal capital markets for alternative organization structures differently.
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What Happened to the East German Housing Market? – A Historical Perspective on the Role of Public Funding –
Claus Michelsen, Dominik Weiß
IWH Discussion Papers,
No. 20,
2009
Abstract
The paper analyses the development of the East German housing market after the reunification of the former German Democratic Republic and the Federal Republic of Germany in 1990. We analyse the dynamics of the East German housing market within the framework of the well-known stock-flow model, proposed by DiPasquale and Wheaton. We show that the today observable disequilibrium to a large extend is caused by post-unification housing policy and its strong fiscal incentives to invest into the housing stock. Moreover, in line with the stylized empirical facts, we show that ‘hidden reserves’ of the housing market were reactivated since the economy of East Germany became market organized. Since initial undersupply was overcome faster than politicians expected, the implemented fiscal stimuli were too strong. In contrast to the widespread opinion that outward migration caused the observable vacancies, this paper shows that not weakness of demand but supply side policies caused the observable disequilibrium.
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Organization and Financing of Innovation, and the Choice between Corporate and Independent Venture Capital
Paolo Fulghieri, Merih Sevilir
Journal of Financial and Quantitative Analysis,
No. 6,
2009
Abstract
This paper examines the impact of competition on the optimal organization and financing structures in innovation-intensive industries. We show that as an optimal response to competition, firms may choose external organization structures established in collaboration with specialized start-ups where they provide start-up financing from their own resources. As the intensity of the competition to innovate increases, firms move from internal to external organization of projects to increase the speed of product innovation and to obtain a competitive advantage with respect to rival firms in their industry. We also show that as the level of competition increases, firms provide a higher level of financing for externally organized projects in the form of corporate venture capital (CVC). Our results help explain the emergence of organization and financing arrangements such as CVC and strategic alliances, where large established firms organize their projects in collaboration with external specialized firms and provide financing for externally organized projects from their own internal resources.
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Lending Technology, Bank Organization and Competition
Hans Degryse, Steven Ongena, Günseli Tümer-Alkan
Journal of Financial Transformation,
2009
Abstract
This paper reviews recent theoretical and empirical studies investigating how both bank technology and organization shape bank-borrower interactions. We refer to two related concepts for bank technology. First, the technologies banks employ in loan granting decisions and second, the advances in information technology linked to the bank's lending technology. We also summarize and interpret the theoretical and empirical work on bank organization and its influence on lending technologies. We show that the choice of lending technology and bank organization depend heavily on the availability of information, the technological progress in the collection of information, as well as the banking market structure and the legal environment. We draw important policy conclusions from the literature. Competition authorities and supervisors have to remain alert to the consequences of the introduction of any new technology because: (1) advances in technology do not necessarily lead to more intense banking competition, and (2) the impact of technological and financial innovation on financial efficiency and stability depends on the incentives of the entire „loan production chain.‟
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Co-existence of Unemployment and Skilled Labour Shortage? Evidence from Thuringia
Dirk Trocka, Marco Sunder
Wirtschaft im Wandel,
No. 4,
2009
Abstract
In the light of favourable business conditions during the previous years, business organizations have repeatedly cautioned about a skilled labour shortage that could constrain future development of enterprises. While shortages may be typical of phases of economic expansion, the skilled labour shortage might turn into a permanent phenomenon if one takes into account the shrinking of the working-age population. The demographic transition occurs at an especially rapid pace in Eastern Germany. At the same time, this region still exhibits high rates of chronic unemployment, which renders the possibility of a skilled labour shortage questionable.
We focus on the federal state of Thuringia and investigate two questions. Firstly, we evaluate to what extent occupation-specific bottlenecks exist both in Germany and in Thuringia, using a set of criteria based on official labour market statistics. We find evidence of high utilization of labour supply in technical and metalworking professions in Germany. In the majority of these occupations, the same is true for Thuringia. Hence, a high level of unemployment and skilled labour shortage may coexist, at least in a transition phase. Secondly, we investigate whether companies in Thuringia already expect problems when searching for skilled personnel in the near future. For this purpose, the IWH has conducted a survey among approximately 1 000 companies. It turns out that 61% of the interviewed companies anticipate such problems, with statistically significant differences with respect to the companies’ characteristics. In addition, we discuss selected policies that companies plan to implement in the field of human resource management when anticipating problems.
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The Impact of Organizational Structure and Lending Technology on Banking Competition
Hans Degryse, Luc Laeven, Steven Ongena
Review of Finance,
No. 2,
2009
Abstract
We investigate how bank organization shapes banking competition. We show that a bank's geographical lending reach and loan pricing strategy is determined by its own and its rivals’ organizational structure. We estimate the impact of organization on the geographical reach and loan pricing of a large bank. We find that the reach of the bank is smaller when rival banks are large and hierarchically organized, have superior communication technology, have a narrower span of organization, and are closer to a decision unit with lending authority. Rival banks’ size and the number of layers to a decision unit soften spatial pricing.
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