Germany and France at cross purposes: the case of Banking Union

In the past, France and Germany were able to exercise leadership in history-making decisions in monetary cooperation, from the establishment of the EMS to EMU. In the case of Banking Union (BU), however, Germany and France turned out to be the main opponents with little common influence. Why could we not observe the familiar pattern of Franco-German co-leadership in building the BU? My explanation points to diverging views on the social purpose of a BU, the asymmetrical distribution of its costs and benefits for the two countries, highly prominent distributional conflicts and severe domestic constraints in Germany. These explanatory factors also account for the unfinished character of Banking Union.     

Offshoring and firm performance: self-selection,effects on performance,or both?

This paper uses unique new data for German manufacturing enterprises from matched regular surveys and a special purpose survey to investigate the causal effect of relocation of activities to a foreign country on firm performance. Compared to non-offshoring firms, firms that relocated activities were larger and more productive, and had a higher share of exports in total sales. These differences existed the year before some firms started to relocate, and this points to self-selection of “better” firms into offshoring. To investigate the causal effects of offshoring, six different variants of a matching approach are used. Contrary to what is often argued we find no evidence for a large negative causal effect of offshoring on employment in Germany.     

Corporate and Individual Influences on Managers' Social Orientation

This paper reports research on the influence of corporate and individual characteristics on managers' social orientation in Germany. The results indicate that mid-level managers expressed a significantly lower social orientation than low-level managers, and that job activity did not impact social orientation. Female respondents expressed a higher social orientation than male respondents. No impact of the political system origin (former East Germany versus former West Germany) on social orientation was shown. Overall, corporate position had a significantly higher impact on social orientation than did the characteristics of the individuals surveyed.     

Money,interest rate spreads,and economic activity

Money, Interest Rate Spreads, and Economic Activity. —Numerous empirical studies for industrial countries have shown that the term structure of interest rates is a good indicator for future output growth. This paper analyzes whether the interest rate spread contains any additional predictive power if the model includes the money stock. A multivariate error-correction framework is applied to three European economies — France, Germany, and Italy. Granger causality tests are performed for various monetary aggregates and the term structure. The evidence concerning the marginal information content is mixed: For France and Italy, the term structure does not improve the results of the basic model whereas it is significant for Germany.     

Commonalities in the order book

This paper uses data from one of the most important European stock markets and shows that, in line with predictions from theoretical market microstructure, a small number of latent factors captures most of the variation in stock specific order books. We show that these order book commonalities are much stronger than liquidity commonality across stocks. The result that bid and ask side as well as the visible and hidden parts of the order book exhibit quite specific dynamics is interpreted as evidence that open order book markets attract a heterogeneous trader population in terms of asset valuations and impatience. Quantifying the informational content of the extracted factors with respect to the evolution of the asset price, we find that the factor information shares are highest (about 10%) for less frequently traded stocks. We also show that the informational content of hidden orders is limited.

A Regime‐Switching Approach to Modeling Rental Prices of U.K. Real Estate Sectors

This article uses regime‐switching models of the threshold type to analyze the adjustment process of rental prices for three U.K. commercial real estate sectors over the period 1974–2008. The nonlinear models outperform their linear counterparts in in‐sample fit. Their out‐of‐sample forecasting ability is better whenever the corresponding linear models contain a significant amount of neglected nonlinearity. Regime switches are triggered when the growth rates of rental price exceed certain threshold levels. For the industrial and retail sectors such regime switches occur in situations of strong excess demand, for the office sector they occur when there is strong excess supply.     

New classical and austrian business cycle theory: Is there a difference?

Conclusions To compare new classical and Austrian theory seems legitimate only with respect to a particular aspect of economic reality, namely business cycles. In the past century, Austrians have covered so many fields of economic theory that the achievements of new classicals are comparatively small. The discussions of both approaches showed that it would not be appropriate to claim that Austrians have developed theonly theory of business cycles which refers to individual behavior and choice. New classicals have rediscovered this approach and used many of the tenets for their explanation. This is not to say that new classical theory completely follows Austrian traditions. But many of the differences appear to be small or are only semantic in character.     

The short-run impact of the stock market appreciation of the 1980s and 1990s on U.S. income inequality

The paper uses 1980 to 2000 Panel Study of Income Dynamics (PSID) data to study the short-run effect of a stock market appreciation on U.S. household income inequality. Fixed-effects regressions suggest that a stock market appreciation raises the incomes of stockholder households more than non-stockholder households. The Gini coefficients derived from the regressions reveal a perceptible but rather volatile increase that can be attributed to the stock market appreciation, especially for the latter parts of the 1980s and 1990s. When averaged by decade, the stock market appreciation raises the Gini coefficient by about 2% for the 1980s and by 3% for the 1990s.