Spillover Effects in Empirical Corporate Finance
Tobias Berg, Markus Reisinger, Daniel Streitz
Journal of Financial Economics,
No. 3,
2021
Abstract
Despite their importance, the discussion of spillover effects in empirical research often misses the rigor dedicated to endogeneity concerns. We analyze a broad set of workhorse models of firm interactions and show that spillovers naturally arise in many corporate finance settings. This has important implications for the estimation of treatment effects: i) even with random treatment, spillovers lead to a complicated bias, ii) fixed effects can exacerbate the spillover-induced bias. We propose simple diagnostic tools for empirical researchers and illustrate our guidance in an application.
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Investment, output gap, and public finances in the medium term: Implications of the Second Supplementary Budget 2021
Andrej Drygalla, Katja Heinisch, Oliver Holtemöller, Axel Lindner, Götz Zeddies
Konjunktur aktuell,
No. 4,
2021
Abstract
Die Bundesregierung plant, mit dem Zweiten Nachtragshaushalt 2021 dem Energie- und Klimafonds eine Rücklage in Höhe von 60 Mrd. Euro zuzuführen. Die Mittel sollen in den Folgejahren in Investitionen in den Klimaschutz und die Transformation der Wirtschaft fließen und zugleich gesamtwirtschaftliche Folgekosten der Pandemie verringern. Diese pandemiebedingten Einbußen sind auch in der mittleren Frist erheblich. Zwar dürften Nachholeffekte beim privaten Konsum die im Jahr 2021 noch deutliche Unterauslastung bis zum Jahr 2024 vollständig verschwinden lassen. Jedoch liegt das Produktionspotenzial in den kommenden Jahren mehr als 1,5% unter dem Ende 2019 vom IWH prognostizierten Wert, vor allem wegen eines geringeren Arbeitsangebots, unter anderem aufgrund deutlich niedrigerer Zuwanderung von Arbeitskräften. Die Investitionen sind gemäß aktueller Mittelfristprojektion im Jahr 2024 ebenfalls noch deutlich niedriger. Die Effekte des Nachtragshaushalts auf Investitionstätigkeit und Produktion lassen sich mit Hilfe des finanzpolitischen Simulationsmodells des IWH abschätzen. Die beabsichtigten Mehrausgaben dürften auf dem Höhepunkt ihrer Wirksamkeit im Jahr 2024 die gesamtwirtschaftliche Aktivität um etwa 0,5% steigern. Allerdings werden die zusätzlichen Investitionen die seit Pandemiebeginn ausgebliebene Investitionstätigkeit bei Weitem nicht kompensieren können. Eine Bewertung des Nachtragshaushals hat die positiven gesamtwirtschaftlichen Effekte zusätzlicher Investitionen und die negativen Effekte auf die Glaubwürdigkeit der Schuldenbremse gegeneinander abzuwägen.
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Technological Innovation and the Bank Lending Channel of Monetary Policy Transmission
Iftekhar Hasan, Xiang Li, Tuomas Takalo
IWH Discussion Papers,
No. 14,
2021
Abstract
This paper studies whether and how banks’ technological innovations affect the bank lending channel of monetary policy transmission. We first provide a theoretical model in which banks’ technological innovation relaxes firms’ earning-based borrowing constraints and thereby enlarges the response of banks’ lending to monetary policy changes. To test the empirical implications, we construct a patent-based measurement of bank-level technological innovation, which can specify the nature of technology and tell whether it is related to the bank’s lending business. We find that lending-related innovations significantly strengthen the transmission of the bank lending channel.
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COVID-19 Financial Aid and Productivity: Has Support Been Well Spent?
Carlo Altomonte, Maria Demertzis, Lionel Fontagné, Steffen Müller
Bruegel-Policy Contributions,
No. 21,
2021
Abstract
Most European Union countries have made good progress with vaccinating their populations against COVID-19 and are now seeing a rebound in economic activity. While the scarring effects of the crisis and the long-term implications of the pandemic are only partially understood, the effects of support given to firms can be evaluated in order to help plan the removal of crisis support. An analysis of France, Germany and Italy shows the potential for ‘cleansing effects’ in that it was the least-productive firms that have been affected most by the crisis. While support was generally not targeted at protecting good firms only, financial support went by and large to those with the capacity to survive and succeed. Labour schemes have been effective in protecting employment.
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14.10.2021 • 26/2021
East German economy less affected by supply bottlenecks than German economy as a whole, but lower vaccination rates pose risks – Implications of the Joint Economic Forecast Autumn 2021 and of Länder data from recent publications of the Federal Statisti
Supply bottlenecks affect production in the manufacturing sector in East Germany somewhat less than in Germany as a whole. With 1.8%, the increase in Gross Domestic Product in eastern Germany in 2021 therefore is likely to be lower than in Germany as a whole (2.4%); this gap is likely to enlarge in 2022, when supply bottlenecks hamper less (East Germany: 3.6%, Germany 4.8%).
Oliver Holtemöller
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“The Good News about Bad News”: Information about Past Organizational Failure and Its Impact on Worker Productivity
Sabrina Jeworrek, Vanessa Mertins, Michael Vlassopoulos
Leadership Quarterly,
No. 3,
2021
Abstract
Failure in organizations is very common. Little is known about whether leaders should provide information about past organizational failure to followers and how this might affect their future performance. We conducted a field experiment in which we recruited temporary workers to carry out a phone campaign to attract new volunteers and randomly assigned them to either receive or not to receive information about a failed mail campaign pursuing the same goal. We find that informed workers performed better, regardless of whether they had previously worked on the failed mail campaign or not. Evidence from a second field experiment with students asked to support voluntarily a campaign for reducing food waste corroborates the finding. We explore the role of leadership tactics behind our findings in a third online survey experiment. We conclude that information about past failure is unlikely to have a negative impact on work performance, and might even lead to performance improvement. Implications for future research on the relevance of leadership tactics when giving such information are discussed.
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15.04.2021 • 12/2021
Economy in East Germany shrank less than in the West, but will have weaker momentum when pandemic disappears – Implications of the Joint Economic Forecast Spring 2021 and new data for East Germany
At 3%, the increase in gross domestic product in eastern Germany in 2021 is likely to be lower than in Germany as a whole (3.7%), as the slump due to the pandemic was smaller in 2020. In the course of the economic recovery in the second half of the year, the unemployment rate is expected to fall slightly.
Oliver Holtemöller
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Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory
Ufuk Akcigit, Sina T. Ates
American Economic Journal: Macroeconomics,
No. 1,
2021
Abstract
In this paper, we review the literature on declining business dynamism and its implications in the United States and propose a unifying theory to analyze the symptoms and the potential causes of this decline. We first highlight 10 pronounced stylized facts related to declining business dynamism documented in the literature and discuss some of the existing attempts to explain them. We then describe a theoretical framework of endogenous markups, innovation, and competition that can potentially speak to all of these facts jointly. We next explore some theoretical predictions of this framework, which are shaped by two interacting forces: a composition effect that determines the market concentration and an incentive effect that determines how firms respond to a given concentration in the economy. The results highlight that a decline in knowledge diffusion between frontier and laggard firms could be a significant driver of empirical trends observed in the data. This study emphasizes the potential of growth theory for the analysis of factors behind declining business dynamism and the need for further investigation in this direction.
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Sovereign Default Risk, Macroeconomic Fluctuations and Monetary-Fiscal Stabilisation
Markus Kirchner, Malte Rieth
IWH Discussion Papers,
No. 22,
2020
Abstract
This paper examines the role of sovereign default beliefs for macroeconomic fluctuations and stabilisation policy in a small open economy where fiscal solvency is a critical problem. We set up and estimate a DSGE model on Turkish data and show that accounting for sovereign risk significantly improves the fit of the model through an endogenous amplication between default beliefs, exchange rate and inflation movements. We then use the estimated model to study the implications of sovereign risk for stability, fiscal and monetary policy, and their interaction. We find that a relatively strong fiscal feedback from deficits to taxes, some exchange rate targeting, or a monetary response to default premia are more effective and efficient stabilisation tools than hawkish inflation targeting.
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14.10.2020 • 22/2020
Economic slump in East Germany not as severe as in Germany as a whole ‒ Implications of the Joint Economic Forecast and new data for East Germany
The German economy started recovering quickly after the drastic pandemic-related slump in spring 2020. The recovery, however, loses much of its momentum in the second half of the year. The Joint Economic Forecast predicts that production levels seen before the crisis will not be reached again until the second half of 2021. In principle, the East German economy is following this pattern, although the economic slump is likely to be somewhat milder.
Oliver Holtemöller
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