24.04.2017 • 22/2017
Higher capital requirements: It’s the firms that end up suffering
61 European banks were scheduled to increase their capital cover by 2012 to provide a sufficient buffer for future crises. As the study by the research group chaired by Reint E. Gropp at the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association shows, the banks did implement these requirements – not by raising their levels of equity, but by reducing their credit supply. This resulted in lower firm, investment, and sales growth for firms which obtained a larger share of their bank credit from these banks.
Reint E. Gropp
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Complex-task Biased Technological Change and the Labor Market
Colin Caines, Florian Hoffmann, Gueorgui Kambourov
Review of Economic Dynamics,
April
2017
Abstract
In this paper we study the relationship between task complexity and the occupational wage- and employment structure. Complex tasks are defined as those requiring higher-order skills, such as the ability to abstract, solve problems, make decisions, or communicate effectively. We measure the task complexity of an occupation by performing Principal Component Analysis on a broad set of occupational descriptors in the Occupational Information Network (O*NET) data. We establish four main empirical facts for the U.S. over the 1980–2005 time period that are robust to the inclusion of a detailed set of controls, subsamples, and levels of aggregation: (1) There is a positive relationship across occupations between task complexity and wages and wage growth; (2) Conditional on task complexity, routine-intensity of an occupation is not a significant predictor of wage growth and wage levels; (3) Labor has reallocated from less complex to more complex occupations over time; (4) Within groups of occupations with similar task complexity labor has reallocated to non-routine occupations over time. We then formulate a model of Complex-Task Biased Technological Change with heterogeneous skills and show analytically that it can rationalize these facts. We conclude that workers in non-routine occupations with low ability of solving complex tasks are not shielded from the labor market effects of automatization.
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12.04.2017 • 20/2017
Auch der Osten ist im moderaten Aufschwung – Implikationen der Gemeinschaftsdiagnose Frühjahr 2017 für Ostdeutschland
Für das Jahr 2017 prognostiziert das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) einen Anstieg des ostdeutschen Bruttoinlandsprodukts mit Berlin um 1,7% (Gemeinschaftsdiagnose für Deutschland insgesamt: 1,5%). Maßgeblicher Treiber ist wie in Deutschland insgesamt die Binnennachfrage. Insbesondere profitiert die Wirtschaft von der hohen Dynamik in Berlin und Sachsen. Die Produktion pro Einwohner bzw. Einwohnerin dürfte in diesem Jahr im Osten wohl erneut etwas schneller als im Westen steigen; somit setzt sich die Tendenz kleiner Fortschritte bei der ökonomischen Konvergenz fort.
Oliver Holtemöller
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12.04.2017 • 19/2017
Joint Economic Forecast Spring 2017: Upturn in Germany strengthens in spite of global economic risks
The German economy is already in the fifth year of a moderate upturn. According to the Gemeinschaftsdiagnose (GD, joint economic forecast) that was prepared by Germany’s five leading economic research institutes on behalf of the Federal Government, capacity utilization is gradually increasing, and aggregate production capacities are now likely to have slightly exceeded their normal utilisation levels. However, cyclical dynamics remain low compared to earlier periods of recoveries, as consumption expenditures, which do not exhibit strong fluctuations, have been the main driving force so far. In addition, net migration increases potential output, counteracting a stronger capacity tightening. “Gross domestic product (GDP) is expected to expand by 1.5% (1.8% adjusted for calendar effects) and 1.8% in the next year. Unemployment is expected to fall to 6.1% in 2016, to 5.7% in 2017 and 5.4% in 2018”, says Oliver Holtemöller, Head of the Department Macroeconomics and vice president of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association. Inflation is expected to increase markedly over the forecast horizon. After an increase in consumer prices of only 0.5% in 2016, the inflation rate is expected to rise to 1.8% in 2017 and 1.7% in 2018. The public budget surplus will reduce only modestly. Public finances are slightly stimulating economic activity in the current year and are cyclically neutral in the year ahead.
Oliver Holtemöller
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23.03.2017 • 16/2017
A conference from young economists for young economists
Halle Institute for Economic Research (IWH) and Martin Luther University Halle-Wittenberg are hosting the 22nd Spring Meeting of Young Economists.
From today until Saturday, the Spring Meeting of Young Economists (SMYE) takes place in Halle (Saale). It is jointly organised by the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association and the Martin Luther University Halle-Wittenberg. The international meeting is a well-known yearly conference organised by the European Association of Young Economists (EAYE). Its chairman, Stijn Baert, is impressed: “Judging from the organisation, the conference will just be great!”
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15.03.2017 • 13/2017
The German Economy: Employment Boom in Germany, but no Overheating of the Economy
Employment in Germany continues to increase healthily, and private consumption expands due to rising real incomes. Investment in equipment, however, remains modest. Overall, economic demand is expanding at roughly the growth rate of potential Gross Domestic Product (GDP), and the output gap is nearly closed. “In 2017, GDP will increase by 1.3% and thus at a lower rate than in the previous year, but this is only due to fewer working days and not to sliding demand,” says Oliver Holtemoeller, Head of the Department Macroeconomics and IWH vice president.
Oliver Holtemöller
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International Banking and Cross-Border Effects of Regulation: Lessons from Canada
H. Evren Damar, Adi Mordel
International Journal of Central Banking,
No. 1,
2017
Abstract
We study how changes in prudential requirements affect cross-border lending of Canadian banks by utilizing an index that aggregates adjustments in key regulatory instruments across jurisdictions. We show that when a destination country tightens local prudential measures, Canadian banks increase the growth rate of lending to that jurisdiction, and the effect is particularly significant when capital requirements are tightened and weaker if banks lend mainly via affiliates. Our evidence also suggests that Canadian banks adjust foreign lending in response to domestic regulatory changes. The results confirm the presence of heterogeneous spillover effects of foreign prudential requirements.
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Inside Asset Purchase Programs: The Effects of Unconventional Policy on Banking Competition
Michael Koetter, Natalia Podlich, Michael Wedow
ECB Working Paper Series,
No. 2017,
2017
Abstract
We test if unconventional monetary policy instruments influence the competitive conduct of banks. Between q2:2010 and q1:2012, the ECB absorbed Euro 218 billion worth of government securities from five EMU countries under the Securities Markets Programme (SMP). Using detailed security holdings data at the bank level, we show that banks exposed to this unexpected (loose) policy shock mildly gained local loan and deposit market shares. Shifts in market shares are driven by banks that increased SMP security holdings during the lifetime of the program and that hold the largest relative SMP portfolio shares. Holding other securities from periphery countries that were not part of the SMP amplifies the positive market share responses. Monopolistic rents approximated by Lerner indices are lower for SMP banks, suggesting a role of the SMP to re-distribute market power differentially, but not necessarily banking profits.
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