The IWH Forecasting Dashboard – From Forecasts to Evaluation and Comparison
Katja Heinisch, Christoph Behrens, Jörg Döpke, Alexander Foltas, Ulrich Fritsche, Tim Köhler, Karsten Müller, Johannes Puckelwald, Hannes Reichmayr
IWH Technical Reports,
No. 1,
2023
Abstract
The paper describes the “Halle Institute for Economic Research (IWH) Forecasting Dashboard (ForDas)”. This tool aims at providing, on a non-commercial basis, historical and actual macroeconomic forecast data for the Germany economy to researchers and interested audiences. The database renders it possible to directly compare forecast quality across selected institutions and over time. It is partly based on data collected in the DFG-funded project “Macroeconomic Forecasts in Great Crises”.
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Aleksandr Kazakov, Michael Koetter, Mirko Titze, Lena Tonzer
Abstract
We study whether government subsidies can stimulate bank funding of marginal investment projects and the associated effect on financial stability. We do so by exploiting granular project-level information for the largest regional economic development programme in Germany since 1997: the Improvement of Regional Economic Structures programme (GRW). By combining the universe of subsidised firms to virtually all German local banks over the period 1998-2019, we test whether this large-scale transfer programme destabilised regional credit markets. Because GRW subsidies to firms are destabilised at the EU level, we can use it as an exogenous shock to identify bank responses. On average, firm subsidies do not affect bank lending, but reduce banks’ distance to default. Average effects conflate important bank-level heterogeneity though. Conditional on various bank traits, we show that well capitalised banks with more industry experience expand lending when being exposed to subsidised firms without exhibiting more risky financial profiles. Our results thus indicate that stable banks can act as an important facilitator of regional economic development policies. Against the backdrop of pervasive transfer payments to mitigate Covid-19 losses and in light of far-reaching transformation policies required to green the economy, our study bears important implications as to whether and which banks to incorporate into the design of transfer Programmes.
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26.01.2022 • 2/2022
Investment, output gap, and public finances in the medium term: Implications of the Second Supplementary Budget 2021
With the Second Supplementary Budget 2021, the German government plans to allocate a reserve of 60 billion euros to the Energy and Climate Fund. This additional spending is also meant to reduce the macroeconomic follow-up costs of the pandemic. According to the IWH’s medium-term projection, the expenditure is expected to increase output by about 0.5% at the peak of its impact in 2024. “While this macroeconomic effect is welcome, the additional investment will by no means compensate for the lack of investment activity since the beginning of the pandemic,” says Oliver Holtemöller, head of the Department Macroeconomics and vice president at Halle Institute for Economic Research (IWH). Moreover, the supplementary budget is likely to reduce confidence in the reliability of the debt brake.
Oliver Holtemöller
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01.07.2020 • 11/2020
New Horizon 2020 project: The Challenge of the Social Impact of Energy Transitions
Funded by the European Commission’s Framework Programme Horizon 2020, the ENTRANCES project recently closed its kick-off meeting with a high scientific and institutional participation, and taking on the challenge of modeling the social impact of the energy transition.
Oliver Holtemöller
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12.02.2020 • 2/2020
Causes of populism: IWH begins international research project
Is the increasing strength of populist parties due to economic causes? The Halle Institute for Economic Research (IWH) is set to play a leading role in scrutinising this controversial question with immediate effect, together with researchers from England, Scotland and the Czech Republic. The Volkswagen Foundation is funding this interdisciplinary project to the tune of almost one million euro for four years.
Steffen Müller
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18.12.2018 • 22/2018
IWH leads large scale EU research project on productivity
Is productivity growth slowing in industrialised countries? And if so, why? From the start of 2019, the Halle Institute for Economic Research (IWH) will be addressing these questions as the coordinator of a new EU project. Economists and statistics experts from nine European partners will collaborate on the three-year project, entitled MICROPROD. With a total budget of just under three million euros, it is the IWH’s largest EU project to date.
Steffen Müller
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Public Investment Subsidies and Firm Performance – Evidence from Germany
Matthias Brachert, Eva Dettmann, Mirko Titze
Jahrbücher für Nationalökonomie und Statistik,
No. 2,
2018
Abstract
This paper assesses firm-level effects of the single largest investment subsidy programme in Germany. The analysis considers grants allocated to firms in East German regions over the period 2007 to 2013 under the regional policy scheme Joint Task ‘Improving Regional Economic Structures’ (GRW). We apply a coarsened exact matching (CEM) in combination with a fixed effects difference-in-differences (FEDiD) estimator to identify the effects of programme participation on the treated firms. For the assessment, we use administrative data from the Federal Statistical Office and the Offices of the Länder to demonstrate that this administrative database offers a huge potential for evidence-based policy advice. The results suggest that investment subsidies have a positive impact on different dimensions of firm development, but do not affect overall firm competitiveness. We find positive short- and medium-run effects on firm employment. The effects on firm turnover remain significant and positive only in the medium-run. Gross fixed capital formation responses positively to GRW funding only during the mean implementation period of the projects but becomes insignificant afterwards. Finally, the effect of GRW-funding on labour productivity remains insignificant throughout the whole period of analysis.
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Enabling the Wisdom of the Crowd: Transparency in Peer-to-Peer Finance
Oliver Rehbein, Michael Koetter
G20 Insights Policy Brief, Policy Area "Financial Resilience",
2017
Abstract
The rapid growth exhibited by peer-to-peer finance markets raises hopes that especially young ventures might obtain better access to funding. Yet, consumer protection concerns are looming as borrowers and projects requesting finance from the crowd are inherently opaque. We suggest clear rules to enable peer-to-peer lenders and investors to more effectively screen projects. We plea for strengthening self-responsibility of the investor crowd by clearly assigning, and limiting the responsibilities of regulatory authorities and recognizing the regulatory difference between new peer-to-peer, and traditional financial markets. As a result the peer-to-peer market can develop to more effectively complement traditional sources of finance, instead of turning into a funding source for bad investment projects looking to exploit uninformed lenders and investors.
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Crowdfunding and Bank Stress
Daniel Blaseg, Michael Koetter
Banking Beyond Banks and Money: A Guide to Banking Services in the Twenty-First Century,
2016
Abstract
Bank instability may induce borrowers to use crowdfunding as a source of external finance. A range of stress indicators help identify banks with potential credit supply constraints, which then can be linked to a unique, manually constructed sample of 157 new ventures seeking equity crowdfunding, for comparison with 200 ventures that do not use crowdfunding. The sample comprises projects from all major German equity crowdfunding platforms since 2011, augmented with controls for venture, manager, and bank characteristics. Crowdfunding is significantly more likely for new ventures that interact with stressed banks. Innovative funding sources are thus particularly relevant in times of stress among conventional financiers. But crowdfunded ventures are generally also more opaque and risky than new ventures that do not use crowdfunding.
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The Forward-looking Disclosures of Corporate Managers: Theory and Evidence
Reint E. Gropp, Rasa Karapandza, Julian Opferkuch
IWH Discussion Papers,
No. 25,
2016
Abstract
We consider an infinitely repeated game in which a privately informed, long-lived manager raises funds from short-lived investors in order to finance a project. The manager can signal project quality to investors by making a (possibly costly) forward-looking disclosure about her project’s potential for success. We find that if the manager’s disclosures are costly, she will never release forward-looking statements that do not convey information to external investors. Furthermore, managers of firms that are transparent and face significant disclosure-related costs will refrain from forward-looking disclosures. In contrast, managers of opaque and profitable firms will follow a policy of accurate disclosures. To test our findings empirically, we devise an index that captures the quantity of forward-looking disclosures in public firms’ 10-K reports, and relate it to multiple firm characteristics. For opaque firms, our index is positively correlated with a firm’s profitability and financing needs. For transparent firms, there is only a weak relation between our index and firm fundamentals. Furthermore, the overall level of forward-looking disclosures declined significantly between 2001 and 2009, possibly as a result of the 2002 Sarbanes-Oxley Act.
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