The CompNet Competitiveness Database The Competitiveness Research Network (CompNet)...
The Case for a European Rating Agency: Evidence from the Eurozone Sovereign Debt Crisis
Journal of International Financial Markets, Institutions and Money,
Politicians frequently voice that European bond issuers would benefit from the presence of a Europe-based rating agency. We take Fitch as a prototype for such an agency. With its ownership structure and a headquarter in London, Fitch is more European than Moody’s and S&P; during the Eurozone sovereign debt crisis, it also issued more favorable ratings. Fitch’s rating actions, however, were largely ignored by the bond market. Our results thus cast doubt on the benefits of a European credit rating agency.
19.12.2018 • 23/2018
IWH Mid-term Projections: The German Economy and Public Finances 2018 to 2025
In 2018 the general government overall balance is likely to be in surplus by almost 60 billion euros. In the medium term, however, demographic conditions will deteriorate, as will public finances. The financial position of the German state will nevertheless remain stable until 2025, unless major negative shocks occur. “But even if interest rates rose significantly or foreign demand declined markedly, only moderate deficits would arise”, says Oliver Holtemöller, head of the Department of Macroeconomics and vice president at Halle Institute for Economic Research (IWH). However, given the expected reduction of the surplus under existing legislation, there is no room for further increases in spending.
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Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected...
18.12.2018 • 22/2018
IWH leads large scale EU research project on productivity
Is productivity growth slowing in industrialised countries? And if so, why? From the start of 2019, the Halle Institute for Economic Research (IWH) will be addressing these questions as the coordinator of a new EU project. Economists and statistics experts from nine European partners will collaborate on the three-year project, entitled MICROPROD. With a total budget of just under three million euros, it is the IWH’s largest EU project to date.
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13.12.2018 • 21/2018
Economic activity in the world and in Germany is losing momentum
In the second half of 2018, the upturn of the German economy has stalled. Production of the automotive industry declined because of delays in switching production to WLTP compliant cars. Irrespectively of this, the German export business has been weakening since the beginning of the year, since the global economy, burdened by the political uncertainties surrounding trade conflicts, the impending Brexit and the conflict over the Italian budget, was unable to keep up with the high momentum of 2017. “It is to be expected that the less benign external environment will not only dampen exports, but will also impact on companies’ investment and hiring decisions”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at Halle Institute for Economic Research (IWH). Gross domestic product is expected to increase by 1.5% in 2018 and by 1.4% in 2019, which is roughly equal to the growth rate of economic capacity in Germany.
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East Germany Rearguard Only investments in education will lead to a further catch-up ...
Inference in Structural Vector Autoregressions when the Identifying Assumptions are not Fully Believed: Re-evaluating the Role of Monetary Policy in Economic Fluctuations
Journal of Monetary Economics,
Point estimates and error bands for SVARs that are set identified are only justified if the researcher is persuaded that some parameter values are a priori more plausible than others. When such prior information exists, traditional approaches can be generalized to allow for doubts about the identifying assumptions. We use information about both structural coefficients and impacts of shocks and propose a new asymmetric t-distribution for incorporating information about signs in a nondogmatic way. We apply these methods to a three-variable macroeconomic model and conclude that monetary policy shocks are not the major driver of output, inflation, or interest rates.