What Do We Learn from Schumpeterian Growth Theory?
Philippe Aghion, Ufuk Akcigit, Peter Howitt
P. Aghion, S. N. Durlauf (eds.), Handbook of Economic Growth, Volume 2B, Amsterdam: North Holland,
2014
Abstract
Schumpeterian growth theory has operationalized Schumpeter’s notion of creative destruction by developing models based on this concept. These models shed light on several aspects of the growth process that could not be properly addressed by alternative theories. In this survey, we focus on four important aspects, namely: (i) the role of competition and market structure; (ii) firm dynamics; (iii) the relationship between growth and development with the notion of appropriate growth institutions; and (iv) the emergence and impact of long-term technological waves. In each case, Schumpeterian growth theory delivers predictions that distinguish it from other growth models and which can be tested using micro data.
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Granularity in Banking and Growth: Does Financial Openness Matter?
Franziska Bremus, Claudia M. Buch
IWH Discussion Papers,
No. 14,
2013
Abstract
We explore the impact of large banks and of financial openness for aggregate growth. Large banks matter because of granular effects: if markets are very concentrated in terms of the size distribution of banks, idiosyncratic shocks at the bank-level do not cancel out in the aggregate but can affect macroeconomic outcomes. Financial openness may affect GDP growth in and of itself, and it may also influence concentration in banking and thus the impact of bank-specific shocks for the aggregate economy. To test these relationships, we use different measures of de jure and de facto financial openness in a linked micro-macro panel dataset. Our research has three main findings: First, bank-level shocks significantly impact on GDP. Second, financial openness lowers GDP growth. Third, granular effects tend to be stronger in financially closed economies.
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Granularity in Banking and Growth: Does Financial Openness Matter?
Franziska Bremus, Claudia M. Buch
CESifo Working Paper No. 4356, August,
2013
Abstract
We explore the impact of large banks and of financial openness for aggregate growth. Large banks matter because of granular effects: if markets are very concentrated in terms of the size distribution of banks, idiosyncratic shocks at the bank-level do not cancel out in the aggregate but can affect macroeconomic outcomes. Financial openness may affect GDP growth in and of itself, and it may also influence concentration in banking and thus the impact of bank-specific shocks for the aggregate economy. To test these relationships, we use different measures of de jure and de facto financial openness in a linked micro-macro panel dataset. Our research has three main findings: First, bank-level shocks significantly impact on GDP. Second, financial openness lowers GDP growth. Third, granular effects tend to be stronger in financially closed economies.
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Evaluation of the Main Achievements of Cohesion Policy Programmes over the Longer Term in 15 Selected Regions (from 1989-1993 Programming Period to the Present) (2011.CE.16.B.AT.015): Case Study Sachsen-Anhalt
Marina Grusevaja, Gerhard Heimpold, O. Schwab, K. Schwarze
Analyse: Bewertungen des Programmplanungszeitraums,
2013
Abstract
Sachsen-Anhalt’s regional development has been heavily determined by the transition from a centrally planned economy to a market economy after German unification in 1990. The process of transition took place during the 1990s as the formal rules associated with a market economy system were adopted. Nevertheless, a number of structural peculiarities which have their roots in the transition period continue to have an impact. This feature is not specific to Sachsen-Anhalt; it concerns all East German regions.
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The Term Structure of Sovereign Default Risk in EMU Member Countries and Its Determinants
Stefan Eichler, Dominik Maltritz
Journal of Banking and Finance,
No. 6,
2013
Abstract
We analyze the determinants of sovereign default risk of EMU member states using government bond yield spreads as risk indicators. We focus on default risk for different time spans indicated by spreads for different maturities. Using a panel framework we analyze whether there are different drivers of default risk for different maturities. We find that lower economic growth and larger openness increase default risk for all maturities. Higher indebtedness only increases short-term risk, whereas net lending, trade balance and interest rate costs only drive long-term default risk.
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German Economy Recovering – Long-Term Approach Needed to Economic Policy: Joint Economic Forecast Spring 2013
Dienstleistungsauftrag des Bundesministeriums für Wirtschaft und Technologie,
2013
Abstract
An upwards tendency re-emerged in the German economy in spring 2013. The situation in the financial markets has eased thanks to subsiding uncertainty regarding the future of the European Monetary Union. The headwind in the world economy has also tailed off somewhat. The institutes expect gross domestic product in Germany to increase by 0.8% this year (68%-projection interval: 0.1% to 1.5%) and by 1.9% next year. The number of unemployed should continue to fall to an annual average of 2.9 million this year and 2.7 million in 2014. The inflation rate is expected to drop to 1.7% this year and edge up to 2.0% next year on the back of rising capacity utilisation. The public budget will be almost balanced in 2013 and should show a surplus of 0.5% in relation to gross domestic product in 2014 thanks to more favourable economic conditions. It is now time to readopt a longer-term approach to economic policy. Although structural adjustment processes implemented in the crisis-afflicted countries have started to deal with institutional problems in the euro area, they are far from resolved. The German public budget also faces massive long-term burdens related to demographic factors.
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Testing for Structural Breaks at Unknown Time: A Steeplechase
Makram El-Shagi, Sebastian Giesen
Computational Economics,
No. 1,
2013
Abstract
This paper analyzes the role of common data problems when identifying structural breaks in small samples. Most notably, we survey small sample properties of the most commonly applied endogenous break tests developed by Brown et al. (J R Stat Soc B 37:149–163, 1975) and Zeileis (Stat Pap 45(1):123–131, 2004), Nyblom (J Am Stat Assoc 84(405):223–230, 1989) and Hansen (J Policy Model 14(4):517–533, 1992), and Andrews et al. (J Econ 70(1):9–38, 1996). Power and size properties are derived using Monte Carlo simulations. We find that the Nyblom test is on par with the commonly used F type tests in a small sample in terms of power. While the Nyblom test’s power decreases if the structural break occurs close to the margin of the sample, it proves far more robust to nonnormal distributions of the error term that are found to matter strongly in small samples although being irrelevant asymptotically for all tests that are analyzed in this paper.
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Corporate Boards and Bank Loan Contracting
Bill Francis, Iftekhar Hasan, Michael Koetter, Qiang Wu
Journal of Financial Research,
No. 4,
2012
Abstract
We investigate the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and nonprice loan terms (e.g., interest rates, collateral, covenants, and performance-pricing provisions) are more favorable, and syndicated loans comprise more lenders. In addition, board size, audit committee structure, and other board characteristics influence bank loan prices. However, they do not consistently affect all nonprice loan terms except for audit committee independence. Our study provides strong evidence that banks recognize the benefits of board monitoring in mitigating information risk ex ante and controlling agency risk ex post, and they reward higher quality boards with more favorable loan contract terms.
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The Impact of Firm and Industry Characteristics on Small Firms’ Capital Structure
Hans Degryse, Peter de Goeij, Peter Kappert
Small Business Economics,
No. 4,
2012
Abstract
We study the impact of firm and industry characteristics on small firms’ capital structure, employing a proprietary database containing financial statements of Dutch small and medium-sized enterprises (SMEs) from 2003 to 2005. The firm characteristics suggest that the capital structure decision is consistent with the pecking-order theory: Dutch SMEs use profits to reduce their debt level, and growing firms increase their debt position since they need more funds. We further document that profits reduce in particular short-term debt, whereas growth increases long-term debt. We also find that inter- and intra-industry effects are important in explaining small firms’ capital structure. Industries exhibit different average debt levels, which is in line with the trade-off theory. Furthermore, there is substantial intra-industry heterogeneity, showing that the degree of industry competition, the degree of agency conflicts, and the heterogeneity in employed technology are also important drivers of capital structure.
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The Performance of Short-term Forecasts of the German Economy before and during the 2008/2009 Recession
Katja Drechsel, Rolf Scheufele
International Journal of Forecasting,
No. 2,
2012
Abstract
The paper analyzes the forecasting performance of leading indicators for industrial production in Germany. We focus on single and pooled leading indicator models both before and during the financial crisis. Pairwise and joint significant tests are used to evaluate single indicator models as well as forecast combination methods. In addition, we investigate the stability of forecasting models during the most recent financial crisis.
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