6th IWH/INFER-Workshop on Applied Economics and Economic Policy: “(Ending) Unconventional Monetary Policy
Birgit Schultz, Gregor von Schweinitz
Wirtschaft im Wandel,
No. 6,
2016
Abstract
Am 29. und 30. September 2016 fand am IWH in Zusammenarbeit mit dem International Network for Economic Research (INFER) der 6. Workshop in der Reihe „Applied Economics and Economic Policy“ statt. Im Rahmen des Workshops stellten Wissenschaftler europäischer Universitäten und internationaler Organisationen ihre neuesten Forschungsergebnisse zu aktuellen ökonomischen Fragen und Problemen vor und diskutierten diese intensiv. Insbesondere gab es einen regen Austausch über das Spezialthema „(Ending) Unconventional Monetary Policy“. Hier ging es vor allem um die geldpolitischen Maßnahmen und Instrumente, die neben dem Zentralbankzins seit der Finanzkrise eingesetzt werden.
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State Aid and Guarantees in Europe
Reint E. Gropp, Lena Tonzer
T. Beck, B. Casu (eds): The Palgrave Handbook of European Banking, London,
2016
Abstract
During the recent financial crisis, governments massively intervened in the banking sector by providing liquidity assistance and capital support to banks in distress. This helped stabilize the financial system in the short run. However, public bailouts also bear the risk of longer-term distortions, for example, by affecting bailout expectations of banks. In this chapter, the authors first provide an overview of state aid interventions during the recent crisis episode. The third section then analyzes the effects of state aid on financial stability from a theoretical view. This is followed by the description of results obtained from empirical studies. The link between the provision of state aid and politics is discussed in the section “Institutional Design and Policy Implications”. Finally, in the section “The European Banking Union” the authors describe the elements of the European Banking Union meant to resolve and restructure banks in distress and to lower the need for public intervention. Based on the preceding analysis, conclusions are drawn regarding the new design.
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Bracket Creeps: Bane or Boon for the Stability of Numerical Budget Rules?
Martin Altemeyer-Bartscher, Götz Zeddies
IWH Discussion Papers,
No. 29,
2016
Abstract
As taxpayers typically pay low attention to a small inflation-induced bracket creep of the income tax, policy-makers tend to postpone its correction into the future. However, the fiscal illusion fades away and political pressure for a tax relief arises since after some years the cumulative increase of the average tax rate exceeds a critical threshold. Using Germany as an example, this paper shows that bracket creeps can provoke revenue cycles in public budgets hindering governments’ compliance with the numerical budget rules. An indexation of the tax tariff could prevent such fluctuations and thus provides a favourable framework for the debt rule.
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Foreign Funding Shocks and the Lending Channel: Do Foreign Banks Adjust Differently?
Felix Noth, Matias Ossandon Busch
Finance Research Letters,
November
2016
Abstract
We document for a set of Latin American emerging countries that the different nature of foreign funding accessed by foreign and local banks affected their lending performance after September 2008. We show that lending growth was weaker for shock-affected foreign banks compared to shock-affected local banks. This evidence represents valuable policy information for regulators concerned with the stability and well-functioning of banking sectors.
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National Politics and Bank Default Risk in the Eurozone
Stefan Eichler, Karol Sobanski
Journal of Financial Stability,
October
2016
Abstract
We study the impact of national politics on default risk of eurozone banks as measured by the stock market-based Distance to Default. We find that national electoral cycles, the power of the government as well as the government’s party ideological alignment significantly affect the stability of banks in the eurozone member countries. Moreover, we show that the impact of national politics on bank default risk is more pronounced for large as well as weakly capitalized banks.
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29.09.2016 • 40/2016
Joint Economic Forecast: German Economy on Track – Economic Policy needs to be Realigned
Thanks to a stable job market and solid consumption, the German economy is experiencing a moderate upswing. The GDP is expected to increase by 1.9 percent this year, 1.4 percent in 2017, and 1.6 percent in 2018, according to the Gemeinschaftsdiagnose (GD, joint economic forecast) that was prepared by five of Europe’s leading economic research institutes on behalf of the Federal Government. The most recent GD, which was released in April, predicted a GDP growth rate of 1.6 percent for 2016 and 1.5 percent for 2017.
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Mere Criticism of the ECB is no Solution
M. Fratzscher, Reint E. Gropp, Jan Pieter Krahnen, Hans-Helmut Kotz, Christian Odendahl, Beatrice Weder di Mauro, Guntram Wolff
Einzelveröffentlichungen,
2016
Abstract
Die Kritik an der EZB in Deutschland ist kontraproduktiv. Die Geldpolitik muss expansiv bleiben, damit die EZB ihrem Mandat zumindest ansatzweise gerecht wird. Das gebietet auch der Erhalt ihrer Glaubwürdigkeit. Die EZB muss nicht weniger, sondern Europas Politik muss mehr tun. Sie muss entschiedener handeln, um Europa wieder auf einen Wachstumspfad zu bringen.
[Eine kürzere Version des Beitrags ist unter dem Titel “Kritik an Draghi ist noch keine Lösung“ erschienen in der Frankfurter Allgemeinen Sonntagszeitung vom 10 April 2016].
Die Politik, auch die deutsche, darf sich nicht länger ihrer Mitverantwortung für die gegenwärtige wirtschaftliche Lage in weiten Teilen Europas entziehen. Benötigt werden eine wachstumsfreundliche Fiskalpolitik, Strukturreformen zur Öffnung neuer Märkte und eine Konsolidierung und Restrukturierung des Finanzsektors. Dabei müssen vor allem wir in Deutschland uns den Spiegel vorhalten – denn die meisten dieser Reformen benötigen wir genauso dringend wie unsere europäischen Nachbarn.
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Konjunktur aktuell: Stabile Konjunktur in Deutschland trotz krisenhaften Umfelds
Konjunktur aktuell,
No. 1,
2016
Abstract
Die deutsche Konjunktur ist trotz internationaler Risiken und politischer Verwerfungen kraftvoll in das Jahr 2016 gestartet. Beschäftigung und Einkommen nehmen zu, und die Binnennachfrage steigt deutlich, auch weil der Staat zusätzliche Ausgaben im Zusammenhang mit der Flüchtlingsmigration tätigt. Allerdings dürfte es im Frühjahr zu einer vorübergehenden Verlangsamung der Dynamik kommen, darauf deuten Stimmungsindikatoren hin. Mit Fortschritten bei der Bewältigung der aktuellen politischen Probleme in Europa dürfte die Zuversicht wieder zunehmen und die deutsche Konjunktur insgesamt stabil bleiben, sodass das Bruttoinlandsprodukt im Jahr 2016 wohl mit einer Rate von 1,5% expandieren wird.
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To Separate or not to Separate Investment from Commercial Banking? An Empirical Analysis of Attention Distortion under Multiple Tasks
Reint E. Gropp, K. Park
IWH Discussion Papers,
No. 2,
2016
Abstract
In the wake of the 2008/2009 financial crisis, a number of policy reports (Vickers, Liikanen, Volcker) proposed to separate investment banking from commercial banking to increase financial stability. This paper empirically examines one theoretical justification for these proposals, namely attention distortion under multiple tasks as in Holmstrom and Milgrom (1991). Universal banks can be viewed as combining two different tasks (investment banking and commercial banking) in the same organization. We estimate pay-performance sensitivities for different segments within universal banks and for pure investment and commercial banks. We show that the pay-performance sensitivity is higher in investment banking than in commercial banking, no matter whether it is organized as part of a universal bank or in a separate institution. Next, the paper shows that relative pay-performance sensitivities of investment and commercial banking are negatively related to the quality of the loan portfolio in universal banks. Depending on the specification, we obtain a reduction in problem loans when investment banking is removed from commercial banks of up to 12 percent. We interpret the evidence to imply that the higher pay-performance sensitivity in investment banking directs the attention of managers away from commercial banking within universal banks, consistent with Holmstrom and Milgrom (1991). Separation of investment banking and commercial banking may indeed be associated with a reduction in risk in commercial banking.
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