This paper empirically examines the role of soft information in the competitive interaction between relationship and transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a relationship bank, but not to a transaction bank. We show that borrowers self-select to relationship banks depending on whether their privately observed soft information is positive or negative. Competition affects the investment in learning the private signal from firms by relationship banks and transaction banks asymmetrically. Relationship banks invest more; transaction banks invest less in soft information, exacerbating the selection effect. Finally, we show that firms where soft information was important in the lending decision were no more likely to default compared to firms where only financial information was used.

We use a multivariate state space framework to analyze the short run impact of money on prices in the United States. The key contribution of this approach is that it allows to identify the impact of money growth on inflation without having to model money demand explicitly.

Using our results, that provide evidence for a substantial impact of money on prices in the US, we analyze the consequences of the Fed's response to the financial crisis. Our results indicate a raise of US inflation above 5% for more than a decade. Alternative exit strategies that we simulate cannot fully compensate for the monetary pressure without risking serious repercussions on the real economy. Further simulations of a double dip in the United States indicate that a repetition of the unusually expansive monetary policy – in addition to increased inflation – might cause growth losses exceeding the contemporary easing of the crisis.

This paper presents a method to conduct early estimates of GDP growth in Germany. We employ MIDAS regressions to circumvent the mixed frequency problem and use pooling techniques to summarize efficiently the information content of the various indicators. More specifically, we investigate whether it is better to disaggregate GDP (either via total value added of each sector or by the expenditure side) or whether a direct approach is more appropriate when it comes to forecasting GDP growth. Our approach combines a large set of monthly and quarterly coincident and leading indicators and takes into account the respective publication delay. In a simulated out-of-sample experiment we evaluate the different modelling strategies conditional on the given state of information and depending on the model averaging technique. The proposed approach is computationally simple and can be easily implemented as a nowcasting tool. Finally, this method also allows retracing the driving forces of the forecast and hence enables the interpretability of the forecast outcome.

Islamic finance is based on ethical principles in line with Islamic religious law. Despite its low share of the global financial market, Islamic finance has been one of this sector's fastest growing components over the last decades and has gained further momentum in the wake of the financial crisis. The paper examines the development of and possible prospects for Islamic finance, with a special focus on Europe. It compares Islamic and conventional finance, particularly as concerns risks associated with the operations of respective institutions, as well as corporate governance. The paper also analyses empirical evidence comparing Islamic and conventional financial institutions with regard to their: (i) efficiency and profitability; and (ii) stability and resilience. Finally, the paper considers the conduct of monetary policy in an Islamic banking context. This is not uncomplicated given the fact that interest rates - normally a cornerstone of monetary policy - are prohibited under Islamic finance. Liquidity management issues are thus discussed here, with particular reference to the euro area.

In the literature on environmental innovations R&D collaborations have been identified as a critical determinant of a firm’s environmental innovation performance. However, the literature suggests that R&D collaboration is not always beneficial. Therefore, a more elaborated analysis of the effects of R&D collaborations on a firm’s environmental innovation performance is necessary. This paper investigates the impact of R&D col-laborations with different partner types such as customers, competitors, suppliers, uni-versities, governmental research institutes, consultants and other firms within the same firm group on a firm’s environmental innovation performance. In addition, this paper addresses the question of whether the diversity of R&D collaboration partners is im-portant for the environmental innovation performance. Firm-level data from 2,337 Ger-man service and manufacturing firms are used in the regression analysis. The results suggest that R&D collaboration with suppliers, customers, universities, governmental research institutes, consultants and other firms within the same firm group has a signifi-cantly positive impact on a firm’s environmental innovation performance, whereas col-laboration with competitors has no significant impact. The diversity of R&D collaboration partners has a significantly positive impact on a firm’s environmental innovation performance.

We study how firm innovativeness is related to individual cooperation events and the structure and dynamics of firms’ ego-networks employing a unique panel dataset for the full population of 233 German laser source manufactures between 1990 and 2010. Firm innovativeness is measured by yearly patent applications as well as patent grants with a two year time-lag. Network measures are calculated on the basis of 570 knowledge-related publicly funded R&D alliances. Estimation results from a panel data count model with fixed effects are suggestive of direct innovation effects due to individual cooperation events, but only as long as structural ego-network characteristics are neglected. Innovativeness is robustly related to ego-network size and ego-network brokerage whereas ego-network density reveals some surprising results.

We seek to quantify the impact on euro area GDP of the European Economic Recovery Plan (EERP) enacted in response to the financial crisis of 2008–2009. To do so, we estimate an extended version of the ECB's New Area-Wide Model with a richly specified fiscal sector. The estimation results point to the existence of important complementarities between private and government consumption and, to a lesser extent, between private and public capital. We first examine the implied present-value multipliers for seven distinct fiscal instruments and show that the estimated complementarities result in fiscal multipliers larger than one for government consumption and investment. We highlight the importance of monetary accommodation for these findings. We then show that the EERP, if implemented as initially enacted, had a sizeable, although short-lived impact on euro area GDP. Since the EERP comprised both revenue and expenditure-based fiscal stimulus measures, the total multiplier is below unity.

Wissensintensive Interaktionen sind mit einer Reihe von Vor- und Nachteilen für die beteiligten Akteure verbunden. Deshalb hat sich ein Literaturstrang entwickelt, welcher der Fragestellung nachgeht, wie sich FuE-Kooperationen auf die Leistungsfähigkeit von Firmen und Regionen auswirken. Diese Studien kommen zu unterschiedlichen Ergebnissen. Das Papier versucht die verschiedenen Ergebnisse der Literatur zusammenzufassen. Ein weiteres Ziel ist es, die in der Literatur verwendeten Methoden zur Bearbeitung der Fragestellung kritisch zu diskutieren. Zudem geht das Papier der Frage nach, inwiefern die in der Literatur verwendeten Methoden und Ansätze die Ergebnisse der Studien beeinflussen. Zur Bearbeitung dieser Fragestellungen wird eine Metaanalyse der relevanten Literatur durchgeführt. Dabei wird gezeigt, dass FuE-Kooperationen einen positiven Effekt auf die Leistungsfähigkeit von Firmen und Regionen haben. Zudem gibt es starke Evidenz dafür, dass die verwendeten Methoden und Ansätze die Ergebnisse der Studien beeinflussen.

Greater openness for trade can have positive welfare effects in terms of higher growth. But increased openness may also increase uncertainty through a higher volatility of employment. We use regional data from Germany to test whether openness for trade has an impact on volatility. We find a downward trend in the unconditional volatility of employment, paralleling patterns for output volatility. The conditional volatility of employment, measuring idiosyncratic developments across states, in contrast, has remained fairly unchanged. In contrast to evidence for the US, we do not find a significant link between employment volatility and trade openness.

Innovation is the result of an interactive process. Knowledge-intensive interactions among different partners are associated with a variety of advantages and disadvantages for the actors involved. Therefore, a rich body of literature investigating the impact of R&D collaboration networks on the innovation performance of firms and regions has developed over the last two decades. Those studies come to different results. The aims of this paper are manifold. First, the paper summarizes the results of the relevant literature. Second, a brief overview of the established methods and approaches used in the literature to investigate this research question is given. The third objective is to answer the question whether the achieved results in the literature are predetermined by the employed methods. Finally, relevant gaps for further research are identified. To answer these questions a meta-analysis of the relevant literature is conducted. This study shows that knowledge-intensive interactions have a rather positive impact on the performance of firms and regions. There is also evidence that the employed methods and approaches used in the literature to investigate this research question predetermine the outcome of the research.