Asymmetric Investment Responses to Firm-specific Uncertainty
Julian Berner, Manuel Buchholz, Lena Tonzer
Abstract
This paper analyzes how firm-specific uncertainty affects firms’ propensity to invest. We measure firm-specific uncertainty as firms’ absolute forecast errors derived from survey data of German manufacturing firms over 2007–2011. In line with the literature, our empirical findings reveal a negative impact of firm-specific uncertainty on investment. However, further results show that the investment response is asymmetric, depending on the size and direction of the forecast error. The investment propensity declines significantly if the realized situation is worse than expected. However, firms do not adjust their investment if the realized situation is better than expected, which suggests that the uncertainty effect counteracts the positive effect due to unexpectedly favorable business conditions. This can be one explanation behind the phenomenon of slow recovery in the aftermath of financial crises. Additional results show that the forecast error is highly concurrent with an ex-ante measure of firm-specific uncertainty we obtain from the survey data. Furthermore, the effect of firm-specific uncertainty is enforced for firms that face a tighter financing situation.
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Size of Training Firms and Cumulated Long-run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers
Steffen Müller, Renate Neubäumer
Abstract
This paper analyzes how life-cycle unemployment of former apprentices depends on the size of the training firm. We start from the hypotheses that the size of training firms reduces long-run cumulated unemployment exposure, e.g. via differences in training quality and in the availability of internal labor markets, and that the access to large training firms depends positively on young workers’ ability and their luck to live in a region with many large and medium-sized training firms. We test these hypotheses empirically by using a large administrative data set for Germany and find corroborative evidence.
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Size of Training Firms – The Role of Firms, Luck, and Ability in Young Workers’ Careers
Steffen Müller, Renate Neubäumer
International Journal of Manpower,
Nr. 5,
2018
Abstract
The purpose of this paper is to analyze how long-run unemployment of former apprentices depends on the size of their training firm and their ability.
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A Market-based Indicator of Currency Risk: Evidence from American Depositary Receipts
Stefan Eichler, Ingmar Roevekamp
IWH Discussion Papers,
Nr. 4,
2016
Abstract
We introduce a novel currency risk measure based on American Depositary Receipts(ADRs). Using a multifactor pricing model, we exploit ADR investors’ exposure to potential devaluation losses to derive an indicator of currency risk. Using weekly data for a sample of 831 ADRs located in 23 emerging markets over the 1994-2014 period, we find that a deterioration in the fiscal and current account balance, as well as higher inflation, increases currency risk. Interaction models reveal that these macroeconomic fundamentals drive currency risk, particularly in countries with managed exchange rates, low levels of foreign exchange reserves and a poor sovereign credit rating.
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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,
Nr. 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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IWH-FuE-Mikrodatenbank: Teil 1: Daten, Datenherkunft und Datenqualität
Matthias Brachert, Wilfried Ehrenfeld, Alexander Giebler, Mirko Titze
IWH Technical Reports,
Nr. 1,
2016
Abstract
Nahezu alle entwickelten Volkswirtschaften haben Programme zur Förderung von Forschung und Entwicklung (FuE) eingeführt. Allerdings ist sehr wenig darüber bekannt, welche Programme eigentlich genau zur Anwendung kommen, welche finanziellen Mittel dafür aufgebracht werden und ob die Programme in der Art und Weise wirken, wie sie ursprünglich intendiert waren. Evaluationsstudien, die auf kausalen Untersuchungsdesigns basieren, können einen wertvollen Beitrag zur Beantwortung der Frage leisten, ob ein Programm tatsächlich Wirkungen entfaltet und welcher der verschiedenen Ansätze am erfolgversprechendsten ist.
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Brexit (Probability) and Effects on Financial Market Stability
Thomas Krause, Felix Noth, Lena Tonzer
IWH Online,
Nr. 5,
2016
Abstract
On 23 June 2016, there will be a referendum in the United Kingdom (UK) on the stay of the country in the European Union (EU). Based on recent poll data, the share of supporters and opponents of an exit varies around 50%. Opponents of the UK breaking up with Brussels („Brexit“) refer to high costs in terms of stagnating economic growth if the UK leaves the EU. The risk of reduced trade, declining foreign direct investment, and a lower degree of financial market integration is high following an exit of the “single market”.
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Kommentar: Großbritanniens Nein zur EU wird für beide Seiten teuer
Reint E. Gropp
Wirtschaft im Wandel,
Nr. 3,
2016
Abstract
Die Briten haben sich überraschend klar gegen einen Verbleib ihres Landes in der Europäischen Union entschieden. Das Ausscheiden Großbritanniens aus der EU hat nicht nur politisch, sondern auch ökonomisch tiefgreifende Konsequenzen für das Land selbst, aber auch für das übrige Europa. Entscheidend ist jetzt die Reaktion der verbleibenden Länder auf das Votum, insbesondere die Frankreichs und Deutschlands.
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Aktuelle Trends: Turbulenzen an den Finanzmärkten vor und nach dem Brexit-Referendum
Lena Tonzer
Wirtschaft im Wandel,
Nr. 3,
2016
Abstract
Das Votum der britischen Bevölkerung, den EU-Verbund verlassen zu wollen, hat zu Turbulenzen auf den Finanzmärkten geführt. Bereits vor dem Referendum am 23. Juni 2016 war ein starker Rückgang der Kurse britischer Bankaktien zu beobachten, wenn die Wahrscheinlichkeit eines Brexits in den Umfragen über 50% stieg, verbunden mit einer Abwertung des britischen Pfunds gegenüber den meisten anderen wichtigen Währungen einschließlich des Euro.
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Von der Transformation zur europäischen Integration: Auf dem Weg zu mehr Wachstumsdynamik – ein Tagungsbericht
Gerhard Heimpold
Wirtschaft im Wandel,
Nr. 2,
2016
Abstract
Unter dem Titel „Von der Transformation zur europäischen Integration: Auf dem Weg zu mehr Wachstumsdynamik“ hat das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) gemeinsam mit Partnern aus Universitäten in Mitteldeutschland am 22. Februar 2016 Forschungsergebnisse zu den Folgen des Strukturwandels, zur Erzielung von mehr Wachstumsdynamik und den wirtschaftspolitischen Rahmenbedingungen hierfür präsentiert.
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