Global economic activity appears to be expanding rapidly during spring 2017. Confidence among managers is either strong or has improved in all major regions, and world trade and industrial production have, after two years of weakness, picked up markedly during last winter. For 2 ½ years, the euro area economy has now been constantly expanding at an annual rate of about 1.6%, slightly above potential. Employment has also been expanding steadily. Production and employment have been recently rising almost everywhere, including countries such as France and Italy where unemployment rates still do not appear to be on a downward trend. Official investment data for 2015 and 2016 appear to be distorted: big multinational firms relocated parts of their assets (intellectual property products in particular) or their registered business offices from countries outside the euro area to Ireland. As a consequence, reported gross fixed capital formation in Ireland expanded by 33% in 2015 and by 45% in 2016. Without this effect, investment growth in the euro area is about one percentage point lower in 2015 and 2016. Headline inflation hit 2% in February, but this was only the effect of higher world oil prices. The core rate is stubbornly at slightly below 1%, and wages rise annually by scarcely 1.5%. The revival of the economy will have to continue for considerably more time until inflation will come close to the ECB target zone. As monetary conditions continue to support growth, financial policies will be slightly expansive, and a certain external stimulus should come from the apparent recovery of world trade. Overall, we forecast euro area GDP to expand by 1.7% in both 2017 and 2018. However, policy uncertainty is substantial and could have a negative effect. In particular, elections in member states might give power to movements that aim at disintegrating Europe. Such a turn could rapidly undermine confidence, in particular in the financial strength of highly indebted member states.

We analyze the inward and outward transmission of regulatory changes through German banks’ (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments. These spillovers are, however, quite heterogeneous between types of banks and can only be observed for some instruments. For instance, domestic affiliates of foreign-owned global banks reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements, and loan-to-value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements is effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.

Unternehmensgründungen durch Wissenschaftler werden als wichtiger Kanal zur Kommerzialisierung von Wissen und Technologien aus öffentlichen Forschungseinrichtungen und daher als Motor der wirtschaftlichen Entwicklung angesehen. Jedoch fehlen Wissenschaftlern oft wichtige unternehmerische Fähigkeiten und Kapital, sodass sie auf Unterstützung angewiesen sind. Am Beispiel der Max-Planck-Gesellschaft in Deutschland wird hier untersucht, inwiefern Unterstützung durch die öffentliche Forschungseinrichtung für angehende Gründer in der Frühphase den Gründungs- und Kommerzialisierungsprozess beschleunigen kann. Die Max-Planck-Gesellschaft ist eine der weltweit führenden Einrichtungen im Bereich der Grundlagenforschung und verfügt zudem mit Max-Planck-Innovation über eine Transfereinheit, die dezidiert und erfolgreich die Kommerzialisierung von Forschungsergebnissen aus der Gesellschaft vorantreibt. Die Ergebnisse der Untersuchung zeigen, dass die Unterstützung durch öffentliche Forschungseinrichtungen die frühe Erstellung eines tragfähigen Business-Plans und die frühe Akquise externen Kapitals fördert, sodass unterstützte Start-ups früher am Markt sind und Umsätze realisieren.

We examine how financial constraints in portfolios of suppliers affect cash holdings at the level of the customer. Utilizing a data set of private and public French companies and their suppliers, we show that customers rely on their financially unconstrained suppliers to provide them with backup liquidity, and that they stockpile approximately 10% less cash than customers with constrained suppliers. This effect persisted during the global financial crisis, highlighting that suppliers may be viable insurers of liquidity even when financing from banks and other external channels is unavailable. We further show that customers with unconstrained suppliers also simultaneously receive more trade credit; that the reduction in cash holdings is greater for firms with stronger ties to their unconstrained suppliers; and that customers reduce their cash holdings following a significant relaxation in their suppliers’ financial constraints through an IPO. Taken together, the results provide important nuance regarding the implications of supplier portfolios and financial constraints on firm liquidity management.

This paper estimates the effect of a foreign funding shock to banks in Brazil after the collapse of Lehman Brothers in September 2008. Our robust results show that bank-specific shocks to Brazilian parent banks negatively affected lending by their individual branches and trigger real economic consequences in Brazilian municipalities: More affected regions face restrictions in aggregated credit and show weaker labor market performance in the aftermath which documents the transmission mechanism of the global financial crisis to local labor markets in emerging countries. The results represent relevant information for regulators concerned with the real effects of cross-border liquidity shocks.

The global financial crisis has again shown that it is important to understand the emergence and measurement of risks in the banking sector. However, there is no consensus in the literature which risk proxy works best at the level of the individual bank. A commonly used measure in applied work is the Z-score, which might suffer from calculation issues given poor data quality. Motivated by the variety of bank risk proxies, our analysis reveals that nonperforming assets are a well-suited complement to the Z-score in studies of bank risk.

Global economic activity has revived since autumn, and equity markets have rallied at the end of the year. Apparently, some of the measures proposed during the US election campaign by the president elect, such as financial market deregulation, economic stimulus, tax cuts and infrastructure are expected to support the economy in the US and beyond. However, this stimulus bears considerable risks already for the near future: other economies could face considerable problems due to a further appreciation of the dollar, rising financing costs and the withdrawal of capital towards the US. In the euro area, as monetary policy continues its expansive course, financing costs will stay very low in 2017, and fiscal policy will be mildly expansive, although a bit less so than in 2016. Confidence of firms and private households has strengthened in recent months, as has the mood on financial markets. We expect that the recovery will continue at about the pace of 2016. GDP will, according to our forecast, increase by 1.6% in 2017 and by 1.7% in 2018. However, the crisis in the Italian banking sector has intensified. It might also trigger another crisis of confidence in European institutional arrangements: according to the Bank Recovery and Resolution Directive, banks may only be saved with public money if owners and creditors of these banks have contributed to the rescue. At present it seems doubtful whether it would be politically feasible to respect this rule. Regarding inflation, our forecast for 2017 is 1.2%. Although energy prices have risen significantly, price pressures are still low.

Die deutsche Konjunktur bleibt aufgrund der starken Binnennachfrage recht kräftig. Im Jahr 2017 wird die Zuwachsrate des Bruttoinlandsprodukts nach der neuen IWH-Prognose 1,3% betragen. Sie fällt damit etwa einen halben Prozentpunkt geringer aus als im Jahr 2016, dies liegt an einer geringeren Anzahl an Arbeitstagen und an einem negativen Wachstumsbeitrag des Außenhandels. Die Verbraucherpreisinflation bleibt mit 1,3% mäßig. Die Arbeitslosigkeit nimmt wohl etwas zu, dazu trägt bei, dass die Integration Geflüchteter in den Arbeitsmarkt langwierig ist.