The Impact of Innovation and Innovation Subsidies on Economic Development in German Regions
Uwe Cantner, Eva Dettmann, Alexander Giebler, Jutta Günther, Maria Kristalova
Regional Studies,
Nr. 9,
2019
Abstract
Public innovation subsidies in a regional environment are expected to unfold a positive economic impact over time. The focus of this paper is on an assessment of the long-run impact of innovation and innovation subsidies in German regions. This is scrutinized by an estimation approach combining panel model and time-series characteristics and using regional data for the years 1980–2014. The results show that innovation and innovation subsidies in the long run have a positive impact on the economic development of regions in Germany. This supports a long-term strategy for regional and innovation policy.
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How Forecast Accuracy Depends on Conditioning Assumptions
Carola Engelke, Katja Heinisch, Christoph Schult
IWH Discussion Papers,
Nr. 18,
2019
Abstract
This paper examines the extent to which errors in economic forecasts are driven by initial assumptions that prove to be incorrect ex post. Therefore, we construct a new data set comprising an unbalanced panel of annual forecasts from different institutions forecasting German GDP and the underlying assumptions. We explicitly control for different forecast horizons to proxy the information available at the release date. Over 75% of squared errors of the GDP forecast comove with the squared errors in their underlying assumptions. The root mean squared forecast error for GDP in our regression sample of 1.52% could be reduced to 1.13% by setting all assumption errors to zero. This implies that the accuracy of the assumptions is of great importance and that forecasters should reveal the framework of their assumptions in order to obtain useful policy recommendations based on economic forecasts.
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26.06.2019 • 14/2019
Studie: Wie Finanzkrisen Menschen unzufriedener machen und wie sich das verhindern lässt
Finanzkrisen haben nicht nur starke Verwerfungen im ökonomischen System zur Folge: Sie beeinflussen auch direkt die Lebenszufriedenheit der Menschen. Am stärksten betroffen sind die Schwachen der Gesellschaft, auch wenn diese unter Umständen gar nicht selbst mit Aktien spekulieren. Das ist das Ergebnis einer neuen Studie der Martin-Luther-Universität Halle-Wittenberg (MLU) und des Leibniz-Instituts für Wirtschaftsforschung Halle (IWH). Diese negativen Folgen könnten die Kauflust der Menschen schmälern und die Wirkung der Krise sogar noch verstärken. Die Studie wurde kürzlich in der Fachzeitschrift „The B.E. Journal of Economic Analysis & Policy“ veröffentlicht.
Lena Tonzer
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On the Empirics of Reserve Requirements and Economic Growth
Jesús Crespo Cuaresma, Gregor von Schweinitz, Katharina Wendt
Journal of Macroeconomics,
June
2019
Abstract
Reserve requirements, as a tool of macroprudential policy, have been increasingly employed since the outbreak of the great financial crisis. We conduct an analysis of the effect of reserve requirements in tranquil and crisis times on long-run growth rates of GDP per capita and credit (%GDP) making use of Bayesian model averaging methods. Regulation has on average a negative effect on GDP in tranquil times, which is only partly offset by a positive (but not robust effect) in crisis times. Credit over GDP is positively affected by higher requirements in the longer run.
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Structural Interpretation of Vector Autoregressions with Incomplete Identification: Revisiting the Role of Oil Supply and Demand Shocks
Christiane Baumeister, James D. Hamilton
American Economic Review,
Nr. 5,
2019
Abstract
Traditional approaches to structural vector autoregressions (VARs) can be viewed as special cases of Bayesian inference arising from very strong prior beliefs. These methods can be generalized with a less restrictive formulation that incorporates uncertainty about the identifying assumptions themselves. We use this approach to revisit the importance of shocks to oil supply and demand. Supply disruptions turn out to be a bigger factor in historical oil price movements and inventory accumulation a smaller factor than implied by earlier estimates. Supply shocks lead to a reduction in global economic activity after a significant lag, whereas shocks to oil demand do not.
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Monetary Policy Communication: Frameworks and Market Impact
Michael McMahon, Alfred Schipke, Xiang Li
A. Schipke, M. Rodlauer, L. Zhang (Hrsg.), The Future of China's Bond Market. Washington, D.C.: International Monetary Fund,
im Erscheinen
Abstract
Bond markets are an important conduit of monetary policy signals to the economy. Reforms that improve the functioning of bond markets will hence facilitate macroeconomic management effectiveness. Here communication plays an increasingly important role. Good monetary policy communication is not only important to improve the effectiveness of monetary policy in the first place, but by reducing uncertainty it makes bond markets more attractive for investors, further improving monetary transmission.
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Inference in Structural Vector Autoregressions when the Identifying Assumptions are not Fully Believed: Re-evaluating the Role of Monetary Policy in Economic Fluctuations
Christiane Baumeister, James D. Hamilton
Journal of Monetary Economics,
2018
Abstract
Point estimates and error bands for SVARs that are set identified are only justified if the researcher is persuaded that some parameter values are a priori more plausible than others. When such prior information exists, traditional approaches can be generalized to allow for doubts about the identifying assumptions. We use information about both structural coefficients and impacts of shocks and propose a new asymmetric t-distribution for incorporating information about signs in a nondogmatic way. We apply these methods to a three-variable macroeconomic model and conclude that monetary policy shocks are not the major driver of output, inflation, or interest rates.
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Banks Fearing the Drought? Liquidity Hoarding as a Response to Idiosyncratic Interbank Funding Dry-ups
Helge Littke, Matias Ossandon Busch
IWH Discussion Papers,
Nr. 12,
2018
Abstract
Since the global financial crisis, economic literature has highlighted banks’ inclination to bolster up their liquid asset positions once the aggregate interbank funding market experiences a dry-up. To this regard, we show that liquidity hoarding and its detrimental effects on credit can also be triggered by idiosyncratic, i.e. bankspecific, interbank funding shocks with implications for monetary policy. Combining a unique data set of the Brazilian banking sector with a novel identification strategy enables us to overcome previous limitations for studying this phenomenon as a bankspecific event. This strategy further helps us to analyse how disruptions in the bank headquarters’ interbank market can lead to liquidity and lending adjustments at the regional bank branch level. From the perspective of the policy maker, understanding this market-to-market spillover effect is important as local bank branch markets are characterised by market concentration and relationship lending.
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What Type of Finance Matters for Growth? Bayesian Model Averaging Evidence
Iftekhar Hasan, Roman Horvath, Jan Mares
World Bank Economic Review,
Nr. 2,
2018
Abstract
We examine the effect of finance on long-term economic growth using Bayesian model averaging to address model uncertainty in cross-country growth regressions. The literature largely focuses on financial indicators that assess the financial depth of banks and stock markets. We examine these indicators jointly with newly developed indicators that assess the stability and efficiency of financial markets. Once we subject the finance-growth regressions to model uncertainty, our results suggest that commonly used indicators of financial development are not robustly related to long-term growth. However, the findings from our global sample indicate that one newly developed indicator—the efficiency of financial intermediaries—is robustly related to long-term growth.
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On the Empirics of Reserve Requirements and Economic Growth
Jesús Crespo Cuaresma, Gregor von Schweinitz, Katharina Wendt
Abstract
Reserve requirements, as a tool of macroprudential policy, have been increasingly employed since the outbreak of the great financial crisis. We conduct an analysis of the effect of reserve requirements in tranquil and crisis times on credit and GDP growth making use of Bayesian model averaging methods. In terms of credit growth, we can show that initial negative effects of higher reserve requirements (which are often reported in the literature) tend to be short-lived and turn positive in the longer run. In terms of GDP per capita growth, we find on average a negative but not robust effect of regulation in tranquil times, which is only partly offset by a positive but also not robust effect in crisis times.
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