Search Results

All
Data Type
Topic
Year
Refresh

Non-linearity in the Finance-Growth Nexus: Evidence from Indonesia

Nuruzzaman Arsyad, Iftekhar Hasan, Wahyoe Soedarmono
International Economics, August 2017
Abstract
This paper investigates the finance-growth nexus where bank credit is decomposed into investment, consumption, and working capital credit. From a panel dataset of provinces in Indonesia, it documents that higher financial development measured by financial deepening and financial intermediation exhibits an inverted U-shaped relationship with economic growth. This non-linear effect of financial deepening is driven by both investment credit and consumption credit. These results suggest that too much investment credit and, to a lesser extent, consumption credit are detrimental to economic growth. Ultimately, only financial intermediation associated with working capital credit has a positive and monotonic impact on economic growth.
Read article

EFN Report Summer 2017: Economic Outlook for the Euro Area in 2017 and 2018

EFN Reports, No. 3, 2017
Abstract
• Worldwide economic activity is vivid in summer 2017. Data on production for the first quarter of the year were only mixed: in the euro area quarterly growth was accelerating, but it went down in the US, Japan, and China. Other basic indicators, however, suggest that these economies continue expanding healthily. • Risks concerning the international economic policy framework remain, in particular since the economic agenda of the US government is still unclear, and no one knows whether the Brexit negotiations will lead the way to an orderly separation of Britain from the EU. • Production in the euro area has been expanding by more that 1 ½ % per year for almost three years now; since summer 2016, this expansion has even gained a bit of pace, mainly due to a expansion in France and, to a lesser extent, in Italy. • The ECB’s cautious hints at a coming normalization of monetary policy were enough to have a discernible effect on financial conditions at the end of June: yields for long term bonds rose, and the euro appreciated. That said, the common currency is still relatively cheap, and borrowing costs for non-financial firms and private households are still low. • Overall, we raise our GDP forecast for 2017 from 1.7% (spring report) to 2.1% and for 2018 to 1.8% (spring: 1.7%). We expect HICP inflation to remain well below the ECB target both in 2017 and 2018. • A major risk for the continuation of the current upswing in 2018 comes from the normalization of monetary policy: it is not clear by how much long term interests will rise and whether higher borrowing costs will jeopardize the confidence of financial markets in the solvency of some public debtors in the euro area.
Read article

EFN Report Spring 2017: Economic Outlook for the Euro Area in 2017 and 2018

EFN Reports, No. 2, 2017
Abstract
Global economic activity appears to be expanding rapidly during spring 2017. Confidence among managers is either strong or has improved in all major regions, and world trade and industrial production have, after two years of weakness, picked up markedly during last winter. For 2 ½ years, the euro area economy has now been constantly expanding at an annual rate of about 1.6%, slightly above potential. Employment has also been expanding steadily. Production and employment have been recently rising almost everywhere, including countries such as France and Italy where unemployment rates still do not appear to be on a downward trend. Official investment data for 2015 and 2016 appear to be distorted: big multinational firms relocated parts of their assets (intellectual property products in particular) or their registered business offices from countries outside the euro area to Ireland. As a consequence, reported gross fixed capital formation in Ireland expanded by 33% in 2015 and by 45% in 2016. Without this effect, investment growth in the euro area is about one percentage point lower in 2015 and 2016. Headline inflation hit 2% in February, but this was only the effect of higher world oil prices. The core rate is stubbornly at slightly below 1%, and wages rise annually by scarcely 1.5%. The revival of the economy will have to continue for considerably more time until inflation will come close to the ECB target zone. As monetary conditions continue to support growth, financial policies will be slightly expansive, and a certain external stimulus should come from the apparent recovery of world trade. Overall, we forecast euro area GDP to expand by 1.7% in both 2017 and 2018. However, policy uncertainty is substantial and could have a negative effect. In particular, elections in member states might give power to movements that aim at disintegrating Europe. Such a turn could rapidly undermine confidence, in particular in the financial strength of highly indebted member states.
Read article

Bank-specific Shocks and House Price Growth in the U.S.

Franziska Bremus, Thomas Krause, Felix Noth
IWH Discussion Papers, No. 3, 2017
Abstract
This paper investigates the link between mortgage supply shocks at the banklevel and regional house price growth in the U.S. using micro-level data on mortgage markets from the Home Mortgage Disclosure Act for the 1990-2014 period. Our results suggest that bank-specific mortgage supply shocks indeed affect house price growth at the regional level. The larger the idiosyncratic shocks to newly issued mortgages, the stronger is house price growth. We show that the positive link between idiosyncratic mortgage shocks and regional house price growth is very robust and economically meaningful, however not very persistent since it fades out after two years.
Read article

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
Read

Does Administrative Status Matter for Urban Growth? Evidence from Present and Former County Capitals in East Germany

Bastian Heider, Albrecht Kauffmann, Martin T. W. Rosenfeld
IWH Discussion Papers, No. 24, 2016
published in: Growth and Change
Abstract
Public sector activities are often neglected in the economic approaches used to analyze the driving forces behind urban growth. The institutional status of a regional capital is a crucial aspect of public sector activities. This paper reports on a quasi-natural experiment on county towns in East Germany. Since 1990, cities in East Germany have demonstrated remarkable differences in population development. During this same period, many towns have lost their status as a county seat due to several administrative reforms. Using a difference-in-difference approach, the annual population development of former county capitals is compared to population change in towns that have successfully held on to their capital status throughout the observed period. The estimations show that maintaining county capital status has a statistically significant positive effect on annual changes in population. This effect is furthermore increasing over time after the implementation of the respective reforms.
Read article

Declining Business Dynamism: What We Know and the Way Forward

Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, Javier Miranda
American Economic Review: Papers and Proceedings, No. 5, 2016
Abstract
A growing body of evidence indicates that the U.S. economy has become less dynamic in recent years. This trend is evident in declining rates of gross job and worker flows as well as declining rates of entrepreneurship and young firm activity, and the trend is pervasive across industries, regions, and firm size classes. We describe the evidence on these changes in the U.S. economy by reviewing existing research. We then describe new empirical facts about the relationship between establishment-level productivity and employment growth, framing our results in terms of canonical models of firm dynamics and suggesting empirically testable potential explanations.
Read article

Regional Capital Flows and Economic Regimes: Evidence from China

Liuchun Deng, Boqun Wang
Economics Letters, April 2016
Abstract
Using provincial data from China, this paper examines the pattern of capital flows in relation to the transition of economic regimes. We show that fast-growing provinces experienced less capital inflows before the large-scale market reform, contrary to the prediction of the neoclassical growth theory. As China transitioned from the central-planning economy to the market economy, the negative correlation between productivity growth and capital inflows became much less pronounced. From a regional perspective, this finding suggests domestic institutional factors play an important role in shaping the pattern of capital flows.
Read article

Vierteljährliche Konjunkturberichterstattung für das Land Sachsen-Anhalt - Die gesamtwirtschaftliche Lage im 4. Quartal 2015 -

Hans-Ulrich Brautzsch, Franziska Exß, Brigitte Loose
IWH Online, No. 1, 2016
Abstract
Die gesamtwirtschaftliche Produktion in Sachsen-Anhalt hat nach den indikatorgestützten Schätzungen des IWH im vierten Quartal des Jahres 2015 um 0,3% zugenommen, nachdem sie im Quartal zuvor zurückgegangen war. Damit dürfte die Expansion im vierten Quartal 2015 in etwa mit der in Deutschland in Gleichklang gewesen sein.
Read article

Vierteljährliche Konjunkturberichterstattung für das Land Sachsen-Anhalt - Die gesamtwirtschaftliche Lage im 3. Quartal 2015 -

Brigitte Loose, Hans-Ulrich Brautzsch, Franziska Exß
IWH Online, No. 12, 2015
Abstract
Die gesamtwirtschaftliche Produktion in Sachsen-Anhalt ist nach den indikatorgestützten Schätzungen des IWH im dritten Quartal des Jahres 2015 um 0,4% zurückgegangen, nachdem sie im Quartal zuvor kräftig zugelegt hatte. Damit blieb die Expansion im laufenden Quartal deutlich hinter der in Deutschland zurück.
Read article
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoSupported by the BMWK