IWH Construction Survey
IWH Construction Survey From 1993 until the first quarter of 2017, the IWH conducted regular surveys among companies. The results of these surveys could be used to promptly…
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Management Buyouts
Management Buyouts in Eastern Germany The study on management buyouts (MBOs) examines an important group of East German companies and their development: companies which, in the…
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Centre for Evidence-based Policy Advice
Centre for Evidence-based Policy Advice (IWH-CEP) The Centre for Evidence-based Policy Advice (IWH-CEP) of the IWH was founded in 2014. It is a platform that bundles and…
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Research Clusters
Three Research Clusters Research Cluster "Economic Dynamics and Stability" Research Questions This cluster focuses on empirical analyses of macroeconomic dynamics and stability.…
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The Importance of Credit Demand for Business Cycle Dynamics
Gregor von Schweinitz
IWH Discussion Papers,
No. 21,
2023
Abstract
This paper contributes to a better understanding of the important role that credit demand plays for credit markets and aggregate macroeconomic developments as both a source and transmitter of economic shocks. I am the first to identify a structural credit demand equation together with credit supply, aggregate supply, demand and monetary policy in a Bayesian structural VAR. The model combines informative priors on structural coefficients and multiple external instruments to achieve identification. In order to improve identification of the credit demand shocks, I construct a new granular instrument from regional mortgage origination.
I find that credit demand is quite elastic with respect to contemporaneous macroeconomic conditions, while credit supply is relatively inelastic. I show that credit supply and demand shocks matter for aggregate fluctuations, albeit at different times: credit demand shocks mostly drove the boom prior to the financial crisis, while credit supply shocks were responsible during and after the crisis itself. In an out-of-sample exercise, I find that the Covid pandemic induced a large expansion of credit demand in 2020Q2, which pushed the US economy towards a sustained recovery and helped to avoid a stagflationary scenario in 2022.
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European Banking in Transformational Times: Regulation, Crises, and Challenges
Michael Koetter, Huyen Nguyen
IWH Studies,
No. 7,
2023
Abstract
This paper assesses the progress made towards the creation of the European Banking Union (EBU) and the evolution of the banking industry in the European Union since the financial crisis of 2007. We review major regulatory changes pertaining to the three pillars of the EBU and the effects of new legislation on both banks and the real economy. Whereas farreaching reforms pertaining to the EBU pillars of supervision and resolution regimes have been implemented, the absence of a European Deposit Scheme remains a crucial deficiency. We discuss how European banks coped with recent challenges, such as the Covid-19 pandemic, a high inflation environment, and digitalization needs, followed by an outlook on selected major challenges lying ahead of this incomplete EBU, notably the transition towards a green economy.
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East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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Productivity
Productivity: More with Less by Better Available resources are scarce. To sustain our society's income and living standards in a world with ecological and demographic change, we…
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Charts
Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected a few graphs to present our main topics visually. If you should have any questions or would…
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Financial Stability
Financial Systems: The Anatomy of the Market Economy How the financial system is constructed, how it works, how to keep it fit and what good a bit of chocolate can do. Dossier In…
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