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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Private Equity and Industry Performance
Shai B. Bernstein, Josh Lerner, Morten Sorensen, Per Strömberg
Management Science,
No. 4,
2017
Abstract
The growth of the private equity industry has spurred concerns about its impact on the economy. This analysis looks across nations and industries to assess the impact of private equity on industry performance. We find that industries where private equity funds invest grow more quickly in terms of total production and employment and appear less exposed to aggregate shocks. Our robustness tests provide some evidence that is consistent with our effects being driven by our preferred channel.
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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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Should Forecasters Use Real-time Data to Evaluate Leading Indicator Models for GDP Prediction? German Evidence
Katja Heinisch, Rolf Scheufele
Abstract
In this paper we investigate whether differences exist among forecasts using real-time or latest-available data to predict gross domestic product (GDP). We employ mixed-frequency models and real-time data to reassess the role of survey data relative to industrial production and orders in Germany. Although we find evidence that forecast characteristics based on real-time and final data releases differ, we also observe minimal impacts on the relative forecasting performance of indicator models. However, when obtaining the optimal combination of soft and hard data, the use of final release data may understate the role of survey information.
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The Drivers of Revenue Productivity: a New Decomposition Analysis with Firm-level Data
Filippo di Mauro, Giordano Mion, Daniel Stöhlker
ECB Working Paper,
No. 2014,
2017
Abstract
This paper aims to derive a methodology to decompose aggregate revenue TFP changes over time into four different components – namely physical TFP, mark-ups, quality and production scale. The new methodology is applied to a panel of EU countries and manufacturing industries over the period 2006-2012. In summary, patterns of measured revenue productivity have been broadly similar across EU countries, most notably when we group them into stressed (Italy, Spain and Slovenia) and non-stressed countries (Belgium, Finland, France and Germany). In particular, measured revenue productivity drops for both groups by about 6 percent during the recent crisis. More specifically, for both stressed and non-stressed countries the drop in revenue productivity was accompanied by a substantial dip in the proxy we use for TFP in quantity terms, as well as by a strong reduction in mark-ups.
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Banks Credit and Productivity Growth
Fadi Hassan, Filippo di Mauro, Gianmarco Ottaviano
ECB Working Paper,
No. 2008,
2017
Abstract
Financial institutions are key to allocate capital to its most productive uses. In order to examine the relationship between productivity and bank credit in the context of different financial market set-ups, we introduce a model of overlapping generations of entrepreneurs under complete and incomplete credit markets. Then, we exploit firm-level data for France, Germany and Italy to explore the relation between bank credit and productivity following the main derivations of the model. We estimate an extended set of elasticities of bank credit with respect to a series of productivity measures of firms. We focus not only on the elasticity between bank credit and productivity during the same year, but also on the elasticity between credit and future realised productivity. Our estimates show a clear Eurozone core-periphery divide, the elasticities between credit and productivity estimated in France and Germany are consistent with complete markets, whereas in Italy they are consistent with incomplete markets. The implication is that in Italy firms turn to be constrained in their long-term investments and bank credit is allocated less efficiently than in France and Germany. Hence capital misallocation by banks can be a key driver of the long-standing slow productivity growth that characterises Italy and other periphery countries.
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Die mittelfristige wirtschaftliche Entwicklung in Deutschland für die Jahre 2016 bis 2021
Hans-Ulrich Brautzsch, Katja Heinisch, Oliver Holtemöller, Brigitte Loose, Matthias Wieschemeyer, Götz Zeddies
Konjunktur aktuell,
No. 4,
2016
Abstract
Nach der Mittelfristprojektion des IWH dürfte das Bruttoinlandsprodukt in Deutschland in den Jahren von 2016 bis 2021 um durchschnittlich 1½% wachsen; das nominale Bruttoinlandsprodukt wird wohl um durchschnittlich 3% zunehmen. Nach einer leichten Überauslastung der Kapazitäten in den Jahren 2016 und 2017 dürfte sich die Produktionslücke mittelfristig schließen. Aufgrund des mittelfristig kaum anziehenden Wachstums im Euroraum und des im Vergleich zum langfristigen Mittel schwachen Welthandels dürften vom Außenhandel in der mittleren Frist kaum Impulse ausgehen; die konjunkturelle Dynamik wird daher nach wie vor maßgeblich von der Inlands¬nachfrage bestimmt. Die Verbraucherpreise ziehen im Prognosezeitraum etwas an.
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05.01.2017 • 3/2017
Secretariat for research network CompNet gets new home at IWH
The Halle Institute for Economic Research (IWH) – Member of the Leibniz Association is pleased to announce that it will be hosting the Secretariat for the Competitiveness Research Network (CompNet), an international network of scholars and practitioners, who share interest for top-notch research and policy analysis on competitiveness and productivity.
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14.12.2016 • 50/2016
The German Economy: Economic Activity Spurred by Private Consumption and Construction
German economic activity remains robust due to strong domestic demand. IWH forecasts gross domestic product (GDP) to increase by 1.3% in 2017. The growth rate is half a percentage point lower than in 2016 due to calendar effects and a negative contribution of external trade. Consumer price inflation also remains modest (1.3%). “Unemployment is expected to increase slightly due to a protracted integration of refugees into the labor market”, says Oliver Holtemöller, Head of the Department Macroeconomics and IWH vice president
Oliver Holtemöller
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