Private Equity and Financial Fragility During the Crisis
Shai B. Bernstein, Josh Lerner, Filippo Mezzanotti
Review of Financial Studies,
No. 4,
2019
Abstract
Does private equity (PE) contribute to financial fragility during economic crises? The proliferation of poorly structured transactions during booms may increase the vulnerability of the economy to downturns. During the 2008 crisis, PE-backed companies decreased investments less than did their peers and experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects are especially strong among financially constrained companies and those whose PE investors had more resources at the crisis onset. In a survey, PE firms report being active investors during the crisis and spending more time working with their portfolio companies.
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07.03.2019 • 7/2019
German economy will pick up speed only slowly
In winter of 2018/2019, the global economy weakened considerably, mainly due to economic policy risks. In Germany, the economy will pick up speed only slowly. According to IWH spring economic forecast, gross domestic product will increase by 0.5% in 2019. Growth in East Germany will amount to 0.7%.
Oliver Holtemöller
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Die wirtschaftliche Entwicklung Sachsen-Anhalts seit 1990
Oliver Holtemöller, Axel Lindner
R. Stöcker, M. Reichel (Hrsg.), Sachsen-Anhalt – eine politische Landeskunde. Halle (Saale): Mitteldeutscher Verlag,
2019
Abstract
Sachsen-Anhalt ist als mittelalterliches Zentrum der Ottonen und als Ursprungsland der Reformation ein »Kernland deutscher Geschichte« und besitzt deutschlandweit die meisten Weltkulturerbestätten. Doch nicht nur historisch und kulturell hat das Land viel zu bieten, auch gesellschaftlich und politisch ist es einen genaueren Blick wert. Die Landeskunde soll diese Facetten des Bundeslandes beleuchten. In 16 aufschlussreichen Beiträgen erfährt der Leser, was Sachsen-Anhalt ausmacht, bewegt und prägt. Ein Anhang listet die Regierungen des Bundeslandes von 1990 bis 2017 auf.
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How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina
Claudia Lambert, Felix Noth, Ulrich Schüwer
Review of Finance,
No. 1,
2019
Abstract
This paper explores how banks react to an exogenous shock caused by Hurricane Katrina in 2005, and how the structure of the banking system affects economic development following the shock. Independent banks based in the disaster areas increase their risk-based capital ratios after the hurricane, while those that are part of a bank holding company on average do not. The effect on independent banks mainly comes from the subgroup of highly capitalized banks. These independent and highly capitalized banks increase their holdings in government securities and reduce their total loan exposures to non-financial firms, while also increasing new lending to these firms. With regard to local economic development, affected counties with a relatively large share of independent banks and relatively high average bank capital ratios show higher economic growth than other affected counties following the catastrophic event.
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For How Long Do IMF Forecasts of World Economic Growth Stay Up-to-date?
Katja Heinisch, Axel Lindner
Applied Economics Letters,
No. 3,
2019
Abstract
This study analyses the performance of the International Monetary Fund (IMF) World Economic Outlook output forecasts for the world and for both the advanced economies and the emerging and developing economies. With a focus on the forecast for the current year and the next year, we examine the durability of IMF forecasts, looking at how much time has to pass so that IMF forecasts can be improved by using leading indicators with monthly updates. Using a real-time data set for GDP and for indicators, we find that some simple single-indicator forecasts on the basis of data that are available at higher frequency can significantly outperform the IMF forecasts as soon as the publication of the IMF’s Outlook is only a few months old. In particular, there is an obvious gain using leading indicators from January to March for the forecast of the current year.
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Mittelfristprojektion des IWH: Wirtschaftsentwicklung und Öffentliche Finanzen 2018 bis 2025
Andrej Drygalla, Katja Heinisch, Oliver Holtemöller, Axel Lindner, Matthias Wieschemeyer, Götz Zeddies
Konjunktur aktuell,
No. 4,
2018
Abstract
In Deutschland wird die Anzahl der Erwerbspersonen mittelfristig aufgrund der Alterung der Bevölkerung sinken und damit auch das Wirtschaftswachstum niedriger ausfallen als in den vergangenen Jahren. Gleichzeitig hat die Bundesregierung eine Reihe von zusätzlichen Staatsausgaben beschlossen. Auf der Grundlage einer gesamtwirtschaftlichen Projektion mit dem IWH-Deutschlandmodell lässt sich aber zeigen, dass es bis zum Jahr 2025 kaum zu Haushaltsdefiziten kommt, auch wenn sämtliche im Koalitionsvertrag enthaltenen finanzpolitischen Maßnahmen umgesetzt werden. Selbst wenn sich die makroökonomischen Rahmenbedingungen verschlechtern, etwa wegen eines deutlichen Zinsanstiegs oder eines Einbruchs der ausländischen Nachfrage, würde der Finanzierungssaldo zwar negativ, die zu erwartenden Defizite lägen aber dennoch wohl unter 0,5% in Relation zum Bruttoinlandspro-dukt. Ein Einbruch der ausländischen Nachfrage würde die Produktion zwar stärker dämpfen als ein Zinsschock, die Effekte auf den gesamtstaatlichen Finanzierungssaldo wären aber vergleichbar. Denn ein Zinsschock belastet eher die Binnennachfrage, von deren Rückgang die staatlichen Einnahmen stärker betroffen sind als von einem Rückgang der Exporte. Für die kommenden Jahre dürfte der deutsche Staatshaushalt damit recht robust sein; dabei ist aber zu beachten, dass etwa die aus dem Rentenpaket resultierenden Mehrausgaben erst nach dem Jahr 2025 deutlich zu Buche schlagen.
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18.12.2018 • 22/2018
IWH leads large scale EU research project on productivity
Is productivity growth slowing in industrialised countries? And if so, why? From the start of 2019, the Halle Institute for Economic Research (IWH) will be addressing these questions as the coordinator of a new EU project. Economists and statistics experts from nine European partners will collaborate on the three-year project, entitled MICROPROD. With a total budget of just under three million euros, it is the IWH’s largest EU project to date.
Steffen Müller
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13.12.2018 • 21/2018
Economic activity in the world and in Germany is losing momentum
In the second half of 2018, the upturn of the German economy has stalled. Production of the automotive industry declined because of delays in switching production to WLTP compliant cars. Irrespectively of this, the German export business has been weakening since the beginning of the year, since the global economy, burdened by the political uncertainties surrounding trade conflicts, the impending Brexit and the conflict over the Italian budget, was unable to keep up with the high momentum of 2017. “It is to be expected that the less benign external environment will not only dampen exports, but will also impact on companies’ investment and hiring decisions”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at Halle Institute for Economic Research (IWH). Gross domestic product is expected to increase by 1.5% in 2018 and by 1.4% in 2019, which is roughly equal to the growth rate of economic capacity in Germany.
Oliver Holtemöller
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Innovation, Reallocation, and Growth
Daron Acemoglu, Ufuk Akcigit, Harun Alp, Nicholas Bloom, William R. Kerr
American Economic Review,
No. 11,
2018
Abstract
We build a model of firm-level innovation, productivity growth, and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census microdata on firm-level output, R&D, and patenting. The model provides a good fit to the dynamics of firm entry and exit, output, and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4 percent improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.
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