Corporate Loan Spreads and Economic Activity
Anthony Saunders, Alessandro Spina, Sascha Steffen, Daniel Streitz
SSRN Working Paper,
2021
Abstract
We use secondary corporate loan-market prices to construct a novel loan-market-based credit spread. This measure has considerable predictive power for economic activity across macroeconomic outcomes in both the U.S. and Europe and captures unique information not contained in public market credit spreads. Loan-market borrowers are compositionally different and particularly sensitive to supply-side frictions as well as financial frictions that emanate from their own balance sheets. This evidence highlights the joint role of financial intermediary and borrower balance-sheet frictions in understanding macroeconomic developments and enriches our understanding of which type of financial frictions matter for the economy.
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Trade Shocks, Labour Markets and Elections in the First Globalisation
Richard Bräuer, Wolf-Fabian Hungerland, Felix Kersting
Abstract
This paper studies the economic and political effects of a large trade shock in agriculture – the grain invasion from the Americas – in Prussia during the first globalisation (1871-1913). We show that this shock accelerated the structural change in the Prussian economy through migration of workers to booming cities. In contrast to studies using today’s data, we do not observe declining per capita income and political polarisation in counties affected by foreign competition. Our results suggest that the negative and persistent effects of trade shocks we see today are not a universal feature of globalisation, but depend on labour mobility. For our analysis, we digitise data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian trade data to isolate exogenous variation.
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Financing Choice and Local Economic Growth: Evidence from Brazil
Iftekhar Hasan, Thiago Christiano Silva, Benjamin Miranda Tabak
Journal of Economic Growth,
Nr. 3,
2021
Abstract
We study how financing non-traditional local activities, conceived here as a proxy for activity diversification, is associated with economic growth. We use municipality-level data from Brazil, a country with large geographical, social, and economic disparities observed across its more than 5500 municipalities. We find that finance to non-traditional local activities associates with higher municipal economic growth, suggesting a positive externality between the non-traditional and traditional sectors. Using large natural disasters in Brazil as sources of unexpected negative events, we find that this association between financing non-traditional local activities and economic growth becomes negative in times of distress. We find that traditional local sectors are more affected than non-traditional sectors following a natural disaster. Precisely because of the non-traditional sector’s dependence on the traditional sector, our results suggest that municipalities should restrengthen their traditional activities during adverse conditions.
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A Comparison of Monthly Global Indicators for Forecasting Growth
Christiane Baumeister, Pierre Guérin
International Journal of Forecasting,
Nr. 3,
2021
Abstract
This paper evaluates the predictive content of a set of alternative monthly indicators of global economic activity for nowcasting and forecasting quarterly world real GDP growth using mixed-frequency models. It shows that a recently proposed indicator that covers multiple dimensions of the global economy consistently produces substantial improvements in forecasting accuracy, while other monthly measures have more mixed success. Specifically, the best-performing model yields impressive gains with MSPE reductions of up to 34% at short horizons and up to 13% at long horizons relative to an autoregressive benchmark. The global economic conditions indicator also contains valuable information for assessing the current and future state of the economy for a set of individual countries and groups of countries. This indicator is used to track the evolution of the nowcasts for the U.S., the OECD area, and the world economy during the COVID-19 pandemic and the main factors that drive the nowcasts are quantified.
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European Firm Concentration and Aggregate Productivity
Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens
Abstract
This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from reallocation accounted for 50% of European productivity growth and markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.
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European Firm Concentration and Aggregate Productivity
Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens
Abstract
This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from reallocation accounted for 50% of European productivity growth and markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.
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Measuring and Accounting for Innovation in the Twenty-First Century
Carol Corrado, Jonathan Haskel, Javier Miranda, Daniel Sichel
NBER Studies in Income and Wealth,
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies.
This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution.
The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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Introduction to "Measuring and Accounting for Innovation in the Twenty-First Century"
Javier Miranda
Measuring and Accounting for Innovation in the Twenty-First Century,
NBER Studies in Income and Wealth, Vol 78 /
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies. This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution. The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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Power Generation and Structural Change: Quantifying Economic Effects of the Coal Phase-out in Germany
Katja Heinisch, Oliver Holtemöller, Christoph Schult
Energy Economics,
2021
Abstract
In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.
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Regional Effects of Professional Sports Franchises – Causal Evidence from Four European Football Leagues
Matthias Brachert
Regional Studies,
Nr. 2,
2021
Abstract
The locational pattern of clubs in four professional football leagues in Europe is used to test the causal effect of relegations on short-run regional development. The study relies on the relegation mode of the classical round-robin tournament in the European model of sport to develop a regression-discontinuity design. The results indicate small and significant negative short-term effects on regional employment and output in the sports-related economic sector. In addition, small negative effects on overall regional employment growth are found. Total regional gross value added remains unaffected.
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