Ten Years after Accession: State Aid in Eastern Europe
Jens Hölscher, Nicole Nulsch, Johannes Stephan
European State Aid Law Quarterly,
No. 2,
2014
Abstract
In the early phase of transition that started with the 1990s, Central and Eastern European Countries (CEEC) have pursued far-reaching vertical and individual industrial policy with a focus on privatisation and restructuring of traditional industries. Foreign investment from the West and the facilitation of the development of a market economy also involved massive injections of State support. With their accession to the European Union (EU), levels and forms of State aid came under critical review by the European Commission. Now that a first decade has passed since the first Eastern enlargement in 2004, this inquiry investigates how State aid policy in the CEECs has developed during the last...
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Modelling Macroeconomic Risk: The Genesis of the European Debt Crisis
Gregor von Schweinitz
Hochschulschrift, Juristische und Wirtschaftswissenschaftliche Fakultät der Martin-Luther-Universität Halle-Wittenberg,
2013
Abstract
Diverging European sovereign bond yields after 2008 are the most visible sign of the European debt crisis. This dissertation examines in a first step, to which extent the development of yields is driven by credit and liquidity risk, and how it is influenced by general uncertainty on financial markets. It can be shown that yields are driven to a significant degree by a flight towards bonds of high liquidity in times of high market uncertainty. In a second step, high yields are interpreted as a sign of an existing crisis in the respective country. Using the signals approach, the early-warning capabilities of four different proposals for the design of the scoreboard as part of the “Macroeconomic Imbalances Procedure” (introduced in December 2011 by the European Commission) are tested, advocating a scoreboard including a variety of many different indicators. In a third step, the methodology of the signals approach is extended to include also results on significance.
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The Impact of Institutional and Social Characteristics on Foreign Direct Investment: Evidence from Japan
Stefan Eichler, Alexander Karmann, N. Lucke
Annals of Financial Economics,
No. 2,
2013
Abstract
We examine the determinants of Japanese foreign direct investment (FDI) focusing on institutional and social factors. Using panel data on 59 countries from 1995 to 2008, we find that host countries with free and open markets and greater cultural distance from Japan attract Japanese FDI. Good institutions, such as a well-developed legal framework and an effective government, are important in promoting Japanese FDI to emerging economies, whereas fewer regulatory restrictions, lower tax burden, and more religious diversity attract Japanese FDI to developed countries. We find that corruption stimulates Japanese FDI to developed countries, which is contrary to most previous research.
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MNEs and Regional R&D Co-operation: Evidence from Post-Transition Economies
Andrea Gauselmann
Grincoh Working Papers,
2013
Abstract
The aim of this paper is to contribute to the literature by investigating the determinants of R&D co-operation between MNEs’ foreign subsidiaries and enterprises in the region of location, thereby leading to a better understanding which firm- and region-specific factors influence this co-operation behavior. Applying a logit model, this paper investigates which firm- and region-specific determinants influence technological cooperation between foreign subsidiaries and suppliers, customers, and research institutions in the region of location. Results suggest that especially the foreign subsidiary’s mandate in terms of R&D, its internal technological embeddedness, its technological capability but also the regional knowledge stock are positively associated with these co-operations. The analysis focuses on post-transition economies, using the example of five selected CEE countries and East Germany. We exploit a unique dataset - the IWH FDI Micro database - which holds information on 1,245 foreign subsidiaries in this region.
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R&D Offshoring and the Productivity Growth of European Regions
Davide Castellani, F. Pieri
CIRCLE Working Papers, No. 20,
No. 20,
2013
Abstract
The recent increase in R&D offshoring have raised fears that knowledge and competitiveness in advanced countries may be at risk of 'hollowing out'. At the same time, economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home. This paper addresses this issue by investigating the extent to which R&D offshoring is associated with productivity dynamics of European regions. We find that offshoring regions have higher productivity growth, but this positive effect fades down with the number of investment projects carried out abroad. A large and positive correlation emerge between the extent of R&D offshoring and the home region productivity growth, supporting the idea that carrying out R&D abroad strengthen European competitiveness.
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Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidence of Granularity
Franziska Bremus, Claudia M. Buch, K. Russ, Monika Schnitzer
NBER Working Paper No. 19093,
2013
Abstract
Does the mere presence of big banks affect macroeconomic outcomes? In this paper, we develop a theory of granularity (Gabaix, 2011) for the banking sector, introducing Bertrand competition and heterogeneous banks charging variable markups. Using this framework, we show conditions under which idiosyncratic shocks to bank lending can generate aggregate fluctuations in the credit supply when the banking sector is highly concentrated. We empirically assess the relevance of these granular effects in banking using a linked micro-macro dataset of more than 80 countries for the years 1995-2009. The banking sector for many countries is indeed granular, as the right tail of the bank size distribution follows a power law. We then demonstrate granular effects in the banking sector on macroeconomic outcomes. The presence of big banks measured by high market concentration is associated with a positive and significant relationship between bank-level credit growth and aggregate growth of credit or gross domestic product.
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The GVAR Handbook: Structure and Applications of a Macro Model of the Global Economy for Policy Analysis
Filippo di Mauro, M. Hashem Pesaran
Oxford University Press,
2013
Abstract
The recent crisis has shown yet again how the world economies are globally interlinked, via a complex net of transmission channels. When it comes, however, to build econometric frameworks aimed at analysing such linkages, modellers are faced with what is called the "curse of dimensionality": there far too many parameters to be estimated with respect to the available observations. The GVAR, a VAR based model of the global economy, offers a solution to this problem. The basic model is composed of a large number of country specific models, comprising domestic, foreign and purely global variables. The foreign variables, however, are treated as weakly exogenous. This assumption, which is typically held when empirically tested for virtually all economies - with the notable exception of the US which is treated differently - allows to estimate first the individual country models separately. Only in a second stage country-specific models are simultaneously solved, thus allowing global interactions.This volume presents - for a first time in a compact and rather easy to read format - principles and structure of the basic GVAR model and a number of its many applications and extensions developed in the last few years by a growing literature. Its main objective is to show how powerful the model can be as a tool for forecasting and scenario analysis. The clear modelling structure of the GVAR appeals to policy makers and practitioners as shown by its growing use among major institutions, as well as by econometricians, as shown by the main extensions and applications.
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A Federal Long-run Projection Model for Germany
Oliver Holtemöller, Maike Irrek, Birgit Schultz
IWH Discussion Papers,
No. 11,
2012
Abstract
Many economic decisions implicitly or explicitly rely on a projection of the medium- or long-term economic development of a country or region. In this paper, we provide a federal long-run projection model for Germany and the German states. The model fea-tures a top-down approach and, as major contribution, uses error correction models to estimate the regional economic development dependent on the national projection. For the medium- and long-term projection of economic activity, we apply a production function approach. We provide a detailed robustness analysis by systematically varying assumptions of the model. Additionally, we explore the effects of different demographic trends on economic development.
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