Entrepreneurial Financing, Advice, and Agency Costs

We develop a model to study the interplay between advice and agency costs in entrepreneurial financing. We demonstrate a tension between the entrepreneur's motivation for effort and the investor's willingness to finance the project. Advice to the entrepreneur exacerbates this tension. Consequently, optimal financing contracts may involve full, partial, or no advice. With partial advice, information flows need to be controlled carefully. Such control is better when advice and finance are integrated as observed by venture capitalists.     

Aufschwung verliert an Fahrt – Weltwirtschaftliches Klima wird rauer

The economic upturn in Germany is entering its sixth year but is losing momentum due to both demand and supply side factors. On the one hand, Germany’s key sales markets have weakened in line with the slowdown in world trade. On the other hand, a growing number of firms face production side bottlenecks, especially in terms of labour and sourcing intermediate goods. This coincides with problems in the automotive industry related to the introduction of the new World Harmonised Light Vehicle Test Procedure (WLTP), which has affected gross domestic product (GDP) growth due to the branch’s economic weight. These adjustment problems, however, should be overcome over the course of the winter. Fiscal stimuli will also take effect as of the beginning of 2019. After 1.7 % growth this year, GDP will increase at rates of 1.9 % in 2019 and 1.8 % in 2020.     

GOVERNMENT SPENDING,ENTRY, AND THE CONSUMPTION CROWDING‐IN PUZZLE

This article documents empirically that net firm entry robustly rises after a U.S. government spending expansion. We use this new finding to test the empirical validity of various model features that have been proposed to generate consumption crowding‐in after positive expenditure shocks. Endogenous‐entry models typically fail to generate the observed joint increase in consumption and entry. Model features that dampen the wealth effect, such as rule‐of‐thumb households or complementarity between labor and consumption in preferences, tend to reduce entry. We show that utility‐ or productivity‐enhancing public spending can reconcile the model with our documented fact and performs well empirically.     

A production rate control policy for stochastic repair and remanufacturing systems

We consider the control of a manufacturing system responding to planned demand at the end of the expected life of each individual piece of equipment and unplanned demand triggered by a major equipment failure. The difficulty of controlling this type of production system resides in the variable nature of the remanufacturing process. In practice, remanufacturing operations for planned demand can be executed at different rates, referring to different component replacement and repair strategies. We formulate this problem as a multi-level control problem and propose a suboptimal control policy. The proposed control policy is described by inventory thresholds triggering the use of different execution modes. Determination of the control policy parameters is based on parameter optimization of analytical cost expressions. A numerical example based on a real case is presented. Our analysis demonstrates that the use of the proposed control approach can lead to a significant reduction in the total average cost, as compared to current practices.     

The Chenery hypothesis and structural change in Eastern Europe

The Newly Liberalizing Countries (NLCs) in Eastern Europe have to undergo a fundamental structural change. In this paper the Chenery Hypothesis (CH) is employed to make a quantitative assessment of this change. The CH, roughly speaking, relates an economy's sectoral structure to its stage of development, its size, and its endowment with natural resources. The paper tests this hypothesis for a sample of 31 developed and developing economies and finds it still valid. Then it uses the results obtained to measure distortions in the NLCs' existing economic structure and to give a projection of future structural change. The calculations make it evident that the industrial sector in the NLCs will experience a marked downsizing whilst the service sector turns out to be too small. But sectoral patterns are not too uniform for all groups of countries. Thus, all projections depend highly on the reference group used to evaluate a ‘master pattern’.     

Indirekte Immobilienanlagen im Portfoliomanagement am Beispiel des deutschen Marktes

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