Regulating Zombie Mortgages
Jonathan Lee, Duc Duy Nguyen, Huyen Nguyen
IWH Discussion Papers,
No. 16,
2024
Abstract
Using the adoption of Zombie Property Law (ZL) across several US states, we show that increased lender accountability in the foreclosure process affects mortgage lending decisions and standards. Difference-in-differences estimations using a state border design show that ZL incentivizes lenders to screen mortgage applications more carefully: they deny more applications and impose higher interest rates on originated loans, especially risky loans. In turn, these loans exhibit higher ex-post performance. ZL also affects lender behavior after borrowers become distressed, causing them to strategically keep delinquent mortgages alive. Our findings inform the debate on policy responses to foreclosure crises.
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Non-Standard Errors
Albert J. Menkveld, Anna Dreber, Felix Holzmeister, Juergen Huber, Magnus Johannesson, Michael Koetter, Markus Kirchner, Sebastian Neusüss, Michael Razen, Utz Weitzel, Shuo Xia, et al.
Journal of Finance,
No. 3,
2024
Abstract
In statistics, samples are drawn from a population in a datagenerating process (DGP). Standard errors measure the uncertainty in sample estimates of population parameters. In science, evidence is generated to test hypotheses in an evidencegenerating process (EGP). We claim that EGP variation across researchers adds uncertainty: non-standard errors. To study them, we let 164 teams test six hypotheses on the same sample. We find that non-standard errors are sizeable, on par with standard errors. Their size (i) co-varies only weakly with team merits, reproducibility, or peer rating, (ii) declines significantly after peer-feedback, and (iii) is underestimated by participants.
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Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament
André Diegmann, Laura Pohlan, Andrea Weber
IWH Discussion Papers,
No. 15,
2024
Abstract
We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset linking politicians and election candidates to the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. Adding information on credit ratings, subsidies and procurement contracts allows us to distinguish between mechanisms driving the effects over the politician’s career.
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Credit Supply Shocks: Financing Real Growth or Takeovers?
Tobias Berg, Daniel Streitz, Michael Wedow
Review of Corporate Finance Studies,
No. 2,
2024
Abstract
How do firms invest when financial constraints are relaxed? We document that firms affected by a large positive credit supply shock predominantly increase borrowing for transaction-based purposes. These treated firms have larger asset and employment growth rates; however, growth entirely stems from the increased takeover activity. Announcement returns indicate a low quality of the credit-supply-induced takeover activity. These results offer the possibility that credit-driven growth can simply reflect redistribution, rather than net gains in assets or employment.
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The Impact of Debtor Distress and Unemployment on Support for Extremist and Populist Political Parties in the Czech Republic 2001–2017
Jakub Grossmann, Štěpán Jurajda, Lucie Zapletalová
IDEA CERGE EI Studie,
No. 11,
2023
Abstract
In this study, we analyze the relationships between rising rates of distraint orders and electoral support for populist political parties and extreme left and right wing political parties at the local level. (This publication is written in czech language.)
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Macro data interactive This service provides time series from official publications (Statistisches Bundesamt [German Federal Statistical Office], Arbeitskreis Volkswirtschaftliche…
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Who Benefits from Place-based Policies? Evidence from Matched Employer-Employee Data
Philipp Grunau, Florian Hoffmann, Thomas Lemieux, Mirko Titze
IWH Discussion Papers,
No. 11,
2024
Abstract
We study the granular wage and employment effects of a German place-based policy using a research design that leverages conditionally exogenous EU-wide rules governing program parameters at the regional level. The place-based program subsidizes investments to create jobs with a subsidy rate that varies across labor market regions. The analysis uses matched data on the universe of establishments and their employees, establishment-level panel data on program participation, and regional scores that generate spatial discontinuities in program eligibility and generosity. Spatial spillovers of the program linked to changing commuting patterns can be assessed using information on place of work and place of residence, a unique feature of the data. These rich data enable us to study the incidence of the place-based program on different groups of individuals. We find that the program helps establishments create jobs that disproportionately benefit younger and less-educated workers. Funded establishments increase their wages but, unlike employment, wage gains do not persist in the long run. Employment effects estimated at the local area level are slightly larger than establishment- level estimates, suggesting limited economic spillover effects. On the other hand, spatial spillovers are large as over half of the employment increase comes from commuters. Using subsidy rates as an instrumental variable for actual subsidies indicates that it costs approximately EUR 25,000 to create a new job in the economically disadvantaged areas targeted by the program.
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27.03.2024 • 11/2024
East Germany's lead over West Germany in terms of growth is bound to shrink – Implications of the Joint Economic Forecast Spring 2024 for the East German economy
In 2023, the East German economy is expected to have expanded by 0.5%, while it shrank by 0.3% in Germany as a whole. The Halle Institute for Economic Research (IWH) forecasts an East German growth rate of 0.5% again for 2024, and a rate of 1.5% in 2025. The unemployment rate is expected to be 7.3% in 2024 and 7.1% in the following year.
Oliver Holtemöller
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Deutsche Wirtschaft kränkelt – Reform der Schuldenbremse kein Allheilmittel
Dienstleistungsauftrag des Bundesministeriums für Wirtschaft und Klimaschutz,
No. 1,
2024
Abstract
Die Wirtschaft in Deutschland ist angeschlagen. Eine bis zuletzt zähe konjunkturelle Schwächephase geht mit schwindenden Wachstumskräften einher. In der lahmenden gesamtwirtschaftlichen Entwicklung überlagern sich somit konjunkturelle und strukturelle Faktoren. Zwar dürfte ab dem Frühjahr eine Erholung einsetzen, die Dynamik wird aber insgesamt nicht allzu groß ausfallen.
Zeitlich verzögert und in abgeschwächter Form hat das konjunkturelle Grundmuster, das die Institute im vergangenen Herbstgutachten gezeichnet hatten, im Prognosezeitraum weiterhin Bestand. Im laufenden Jahr avanciert der private Konsum zur wichtigsten Triebkraft für die Konjunktur. Nachdem der ab Mitte 2021 einsetzende Teuerungsschub die Massenkaufkraft zwei Jahre lang drastisch geschmälert hatte, steigen die real verfügbaren Einkommen nun wieder deutlich. Zum einen bildet sich der kräftige Preisauftrieb weiter zurück, zum anderen werden nun mehr und mehr höhere Lohnabschlüsse wirksam, die zunächst nur verzögert an die hohe Geldentwertung angepasst werden konnten. Zudem schlägt auch bei den monetären Sozialleistungen in beiden Prognosejahren wieder ein deutliches reales Plus zu Buche. Damit fließt insgesamt mehr Kaufkraft an private Haushalte. Während somit in diesem Jahr die konsumbezogenen Auftriebskräfte dominieren, trägt im kommenden Jahr vermehrt das Auslandsgeschäft die Konjunktur.
Alles in allem revidieren die Institute ihre Prognose für die Veränderung des Bruttoinlandsprodukts im laufenden Jahr gegenüber ihrem Herbstgutachten deutlich um 1,2 Prozentpunkte nach unten auf nunmehr 0,1 %. Die Prognose für die Rate im kommenden Jahr bleibt mit 1,4 % nahezu unverändert (Rücknahme um 0,1 Prozentpunkte), geht aber mit einem um über 30 Mrd. Euro geringeren Volumen der Wirtschaftsleistung einher. Die Werte für die jahresdurchschnittliche Veränderung überzeichnen die Unterschiede in der konjunkturellen Dynamik beider Jahre, die ausweislich der jeweiligen Verlaufsraten mit 1,0 % und 1,5 % weniger ausgeprägt sind. Gleichwohl verlagert sich die Erholung nunmehr stärker in das kommende Jahr.
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Declining Business Dynamism in Europe: The Role of Shocks, Market Power, and Technology
Filippo Biondi, Sergio Inferrera, Matthias Mertens, Javier Miranda
VoxEU CEPR,
2024
Abstract
We study changes in business dynamism in Europe after 2000 using novel micro-aggregated data that we collected for 19 European countries. In all countries, we document a broad-based decline in job reallocation rates that concerns most economic sectors and size classes. This decline is mainly driven by dynamics within sectors, size, and age classes rather than by compositional changes. Large and mature firms experience the strongest decline in job reallocation rates. Simultaneously, the employment shares of young firms decline. Consistent with US evidence, firms’ employment has become less responsive to productivity shocks. However, the dispersion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns, we derive and apply a novel firm-level framework that relates changes in firms’ sales, market power, wages, and production technology to firms’ responsiveness and job reallocation.
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