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People Doctoral Students PhD Representatives Alumni Supervisors Lecturers Coordinators Doctoral Students Afroza Alam (Supervisor: Reint Gropp ) Julian Andres Diaz Acosta…
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PhD Graduates of the Department of Financial Markets Eleonora Sfrappini: "Four Essays on Banking, Climate Risks and Financial Regulation" (2024) Willam McShane: "The Competitive…
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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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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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Speed Projects On this page, you will find the IWH EXplore Speed Projects in chronologically descending order. 2021 2020 2019 2018 2017 2016 2015 2014 2021 SPEED 2021/01…
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People Job Market Candidates Doctoral Students PhD Representatives Alumni Supervisors Lecturers Coordinators Job Market Candidates Tommaso Bighelli Job market paper: "The…
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Evidence-based Support for Adaptation Policies in Emerging Economies
Maximilian Banning, Anett Großmann, Katja Heinisch, Frank Hohmann, Christian Lutz, Christoph Schult
IWH Studies,
No. 2,
2023
Abstract
In recent years, the impacts of climate change become increasingly evident, both in magnitude and frequency. The design and implementation of adequate climate adaptation policies play an important role in the macroeconomic policy discourse to assess the impact of climate change on regional and sectoral economic growth. We propose different modelling approaches to quantify the socio-economic impacts of climate change and design specific adaptations in three emerging market economies (Kazakhstan, Georgia and Vietnam) which belong to the areas that are heavily exposed to climate change. A Dynamic General Equilibrium (DGE) model has been used for Vietnam and economy-energy-emission (E3) models for the other two countries. Our modelling results show how different climate hazards impact the economy up to the year 2050. Adaptation measures in particular in the agricultural sector have positive implications for the gross domestic product (GDP). However, some adaptation measures can even increase greenhouse gas emissions. In addition, the focus on GDP as the main indicator to evaluate policy measures can produce welfare-reducing policy decisions.
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Physical Climate Change and the Sovereign Risk of Emerging Economies
Hannes Böhm
Journal of Economic Structures,
2022
Abstract
I show that rising temperatures can detrimentally affect the sovereign creditworthiness of emerging economies. To this end, I collect long-term monthly temperature data of 54 emerging markets. I calculate a country’s temperature deviation from its historical average, which approximates present-day climate change trends. Running regressions from 1994m1 to 2018m12, I find that higher temperature anomalies lower sovereign bond performances (i.e., increase sovereign risk) significantly for countries that are warmer on average and have lower seasonality. The estimated magnitudes suggest that affected countries likely face significant increases in their sovereign borrowing costs if temperatures continue to rise due to climate change. However, results indicate that stronger institutions can make a country more resilient towards temperature shocks, which holds independent of a country’s climate.
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Ricardian Equivalence, Foreign Debt and Sovereign Default Risk
Stefan Eichler, Ju Hyun Pyun
Journal of Economic Behavior and Organization,
May
2022
Abstract
We study the impact of sovereign solvency on the private-public savings offset. Using data on 80 economies for 1989–2018, we find robust evidence for a U-shaped pattern in the private-public savings offset in sovereign credit ratings. While the 1:1 savings offset is observed at intermediate levels of sovereign solvency, fiscal deficits are not offset by private savings at extremely low and high levels of sovereign solvency. Particularly, the U-shaped pattern is more pronounced for countries with high levels of foreign ownership of government debt. The U-shaped pattern is an emerging market phenomenon; additionally, it is confirmed when considering foreign currency rating and external public debt, but not for domestic currency rating and domestic public debt. For considerable foreign ownership of sovereign bonds, sovereign default constitutes a net wealth gain for domestic consumers.
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Globalization, Productivity Growth, and Labor Compensation
Christian Dreger, Marius Fourné, Oliver Holtemöller
IWH Discussion Papers,
No. 7,
2022
Abstract
We analyze how changes in international trade integration affect productivity and the functional income distribution. To account for endogeneity, we construct a leaveout measure for international trade integration for country-industry pairs using international input-output tables. Our findings corroborate on the country-industry level that international trade integration increases productivity. Moreover, we show that both trade in intermediate inputs and trade in value added is associated with lower labor shares in emerging markets. For advanced countries, we document a positive effect of trade in value added on the labor share of income. Further, we show that the effects on productivity and labor share are heterogeneous across different sectors. Finally, we discuss the implications of our results for a possible throwback in international trade integration due to experiences from recent crises.
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