Why They Keep Missing: An Empirical Investigation of Sovereign Bond Ratings and Their Timing
Gregor von Schweinitz, Makram El-Shagi
Scottish Journal of Political Economy,
Nr. 2,
2022
Abstract
Two contradictory strands of the rating literature criticize that rating agencies merely follow the market on the one hand, and emphasizing that rating changes affect capital movements on the other hand. Both focus on explaining rating levels rather than the timing of rating announcements. Contrarily, we explicitly differentiate between a decision to assess a country and the actual rating decision. We show that this differentiation significantly improves the estimation of the rating function. The three major rating agencies treat economic fundamentals similarly, while differing in their response to other factors such as strategic considerations. This reconciles the conflicting literature.
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Mission, Motivation, and the Active Decision to Work for a Social Cause
Sabrina Jeworrek, Vanessa Mertins
Nonprofit and Voluntary Sector Quarterly,
Nr. 2,
2022
Abstract
The mission of a job affects the type of worker attracted to an organization but may also provide incentives to an existing workforce. We conducted a natural field experiment with 246 short-term workers. We randomly allocated some of these workers to either a prosocial or a commercial job. Our data suggest that the mission of a job has a performance-enhancing motivational impact on particular individuals only, those with a prosocial attitude. However, the mission is very important if it has been actively selected. Those workers who have chosen to contribute to a social cause outperform the ones randomly assigned to the same job by about half a standard deviation. This effect seems to be a universal phenomenon that is not driven by information about the alternative job, the choice itself, or a particular subgroup.
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Offshoring, Domestic Employment and Production. Evidence from the German International Sourcing Survey
Wolfhard Kaus, Markus Zimmermann
IWH Discussion Papers,
Nr. 14,
2022
Abstract
This paper analyses the effect of offshoring (i.e., the relocation of activities previously performed in-house to foreign countries) on various firm outcomes (domestic employment, production, and productivity). It uses data from the International Sourcing Survey (ISS) 2017 for Germany, linked to other firm level data such as business register and ITGS data. First, we find that offshoring is a rare event: In the sample of firms with 50 or more persons employed, only about 3% of manufacturing firms and 1% of business service firms have performed offshoring in the period 2014-2016. Second, difference-in-differences propensity score matching estimates reveal a negative effect of offshoring on domestic employment and production. Most of this negative effect is not because the offshoring firms shrink, but rather because they don’t grow as fast as the non-offshoring firms. We further decompose the underlying employment dynamics by using direct survey evidence on how many jobs the firms destroyed/created due to offshoring. Moreover, we do not find an effect on labour productivity, since the negative effect on domestic employment and production are more or less of the same size. Third, the German data confirm previous findings for Denmark that offshoring is associated with an increase in the share of ‘produced goods imports’, i.e. offshoring firms increase their imports for the same goods they continue to produce domestically. In contrast, it is not the case that offshoring firms increase the share of intermediate goods imports (a commonly used proxy for offshoring), as defined by the BEC Rev. 5 classification.
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Sovereign Default Risk, Macroeconomic Fluctuations and Monetary-Fiscal Stabilisation
Markus Kirchner, Malte Rieth
IWH Discussion Papers,
Nr. 22,
2020
Abstract
This paper examines the role of sovereign default beliefs for macroeconomic fluctuations and stabilisation policy in a small open economy where fiscal solvency is a critical problem. We set up and estimate a DSGE model on Turkish data and show that accounting for sovereign risk significantly improves the fit of the model through an endogenous amplication between default beliefs, exchange rate and inflation movements. We then use the estimated model to study the implications of sovereign risk for stability, fiscal and monetary policy, and their interaction. We find that a relatively strong fiscal feedback from deficits to taxes, some exchange rate targeting, or a monetary response to default premia are more effective and efficient stabilisation tools than hawkish inflation targeting.
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Disentangling Covid-19, Economic Mobility, and Containment Policy Shocks
Annika Camehl, Malte Rieth
IWH Discussion Papers,
Nr. 2,
2021
Abstract
We study the dynamic impact of Covid-19, economic mobility, and containment policy shocks. We use Bayesian panel structural vector autoregressions with daily data for 44 countries, identified through sign and zero restrictions. Incidence and mobility shocks raise cases and deaths significantly for two months. Restrictive policy shocks lower mobility immediately, cases after one week, and deaths after three weeks. Non-pharmaceutical interventions explain half of the variation in mobility, cases, and deaths worldwide. These flattened the pandemic curve, while deepening the global mobility recession. The policy tradeoff is 1 p.p. less mobility per day for 9% fewer deaths after two months.
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The Impact of Active Aggregate Demand on Utilisation-adjusted TFP
Konstantin Gantert
IWH Discussion Papers,
Nr. 9,
2022
Abstract
Non-clearing goods markets are an important driver of capacity utilisation and total factor productivity (TFP). The trade-off between goods prices and household search effort is central to goods market matching and therefore drives TFP over the business cycle. In this paper, I develop a New-Keynesian DSGE model with capital utilisation, worker effort, and expand it with goods market search-and-matching (SaM) to model non-clearing goods markets. I conduct a horse-race between the different capacity utilisation channels using Bayesian estimation and capacity utilisation survey data. Models that include goods market SaM improve the data fit, while the capital utilisation and worker effort channels are rendered less important compared to the literature. It follows that TFP fluctuations increase for demand and goods market mismatch shocks, while they decrease for technology shocks. This pattern increases as goods market frictions increase and as prices become stickier. The paper shows the importance of non-clearing goods markets in explaining the difference between technology and TFP over the business cycle.
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Epidemics in the Neoclassical and New Keynesian Models
Martin S. Eichenbaum, Sergio Rebelo, Mathias Trabandt
Abstract
We analyze the effects of an epidemic in three standard macroeconomic models. We find that the neoclassical model does not rationalize the positive comovement of consumption and investment observed in recessions associated with an epidemic. Introducing monopolistic competition into the neoclassical model remedies this shortcoming even when prices are completely flexible. Finally, sticky prices lead to a larger recession but do not fundamentally alter the predictions of the monopolistic competition model.
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Wachstumsprojektion 2025 für die deutschen Länder: Produktion je Einwohner divergiert
Oliver Holtemöller, Maike Irrek
Wirtschaft im Wandel,
Nr. 4,
2012
Abstract
Viele ökonomische Entscheidungen basieren implizit oder explizit auf Projektionen der wirtschaftlichen Aktivität in einem Land oder einer Region. In diesem Artikel wird ein langfristiges Projektionsmodell für Deutschland insgesamt und die deutschen Länder vorgestellt, das am IWH entwickelt worden ist. Das Modell beruht auf einer gesamtwirtschaftlichen Produktionsfunktion; die Produktionsfaktoren Arbeit und Kapital sowie die Produktivität werden mit Zeitreihenmodellen fortgeschrieben. Die wirtschaftliche Entwicklung in Deutschland insgesamt wird in die Teilmodelle für die Länder integriert, und die Annäherung der einzelnen Länder an den Bundestrend wird mit ökonometrischen Verfahren geschätzt. Mit Hilfe des Modells wird eine Projektion der wirtschaftlichen Aktivität in Deutschland insgesamt und in den Ländern bis zum Jahr 2025 vorgenommen. Ein wichtiges Resultat ist, dass die ungünstigere demographische Entwicklung in den ostdeutschen Ländern wohl nicht durch weitere Konvergenz der Produktivität und der Kapitalintensität kompensiert werden kann, sodass die Produktion je Einwohner in den ostdeutschen Ländern schwächer zunehmen dürfte als in den westdeutschen Ländern. Zwar verläuft die Entwicklung auch in den westdeutschen
Ländern heterogen, es dürfte aber im Gegensatz zu den ostdeutschen Flächenländern in keinem westdeutschen Land mit heute unterdurchschnittlicher Produktion je Einwohner zu einer spürbaren Vergrößerung des Abstandes zum Bundesdurchschnitt kommen.
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Projektion der wirtschaftlichen Entwicklung in den Bundesländern 2022 bis 2060
Oliver Holtemöller
IWH Technical Reports,
Nr. 1,
2022
Abstract
Die Entwicklung der wirtschaftlichen Leistungsfähigkeit in den Bundesländern wird in den kommenden Jahren vor allem durch das langfristige Produktivitätswachstum und die Verschiebung der Altersstruktur gekennzeichnet sein. Der Altenquotient, der das zahlenmäßige Verhältnis von Personen über 64 Jahren zu den Personen zwischen 15 und 64 Jahren abbildet, wird gemäß Bevölkerungsvorausberechnungen der Statistischen Ämter von gut 30% auf über 50% bis zum Jahr 2060 ansteigen. Allerdings unterscheiden sich Ausgangslage bei der Produktivität und Altersstruktur in den Bundesländern teilweise erheblich, sodass sich auch das Bruttoinlandsprodukt je Einwohner in den kommenden Jahren regional unterschiedlich entwickeln wird.
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Explaining Regional Disparities in Housing Prices across German Districts
Lars Brausewetter, Stephan L. Thomsen, Johannes Trunzer
IZA Institute of Labor Economics,
March
2022
Abstract
Over the last decade, German housing prices have increased unprecedentedly. Drawing on quality-adjusted housing price data at the district level, we document large and increasing regional disparities: growth rates were higher in 1) the largest seven cities, 2) districts located in the south, and 3) districts with higher initial price levels. Indications of price bubbles are concentrated in the largest cities and in the purchasing market. Prices seem to be driven by the demand side: increasing population density, higher shares of academically educated employees and increasing purchasing power explain our findings, while supply remained relatively constrained in the short term.
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