Incomplete capital markets and credit constraints for small and medium-sized enterprises (SMEs) are often considered obstacles to economic growth, thus motivating government interventions in capital markets. While such policies are common, it is less clear to what extent these interventions result in firm growth or to which firms interventions should be targeted. Using a unique dataset with information about state bank loans targeting credit-constrained SMEs in Sweden with and without complementary private bank loans, this paper contributes to the literature by studying how these loans affect the targeted firms for several outcome variables. The results suggest that the loans create a one-off increase in investments, with long-term, positive effects for sales and labor productivity but only for firms with 10 or fewer employees. Increased access to capital by firms can therefore produce increases in economic output but only in a specific type of firm. This insight is of key importance in designing policy if the aim is to increase economic growth.
{"title":"Take it to the (public) bank: The efficiency of public bank loans to private firms","authors":"Anders Kärnä","doi":"10.1515/ger-023-19","DOIUrl":"https://doi.org/10.1515/ger-023-19","url":null,"abstract":"Incomplete capital markets and credit constraints for small and medium-sized enterprises (SMEs) are often considered obstacles to economic growth, thus motivating government interventions in capital markets. While such policies are common, it is less clear to what extent these interventions result in firm growth or to which firms interventions should be targeted. Using a unique dataset with information about state bank loans targeting credit-constrained SMEs in Sweden with and without complementary private bank loans, this paper contributes to the literature by studying how these loans affect the targeted firms for several outcome variables. The results suggest that the loans create a one-off increase in investments, with long-term, positive effects for sales and labor productivity but only for firms with 10 or fewer employees. Increased access to capital by firms can therefore produce increases in economic output but only in a specific type of firm. This insight is of key importance in designing policy if the aim is to increase economic growth.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"188 1","pages":""},"PeriodicalIF":1.1,"publicationDate":"2021-02-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138517043","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We investigate the regional distribution of the COVID-19 outbreak in Germany. We use a novel digital mobility dataset, that traces the undertaken trips on Easter Sunday 2020 and instrument them with regional accessibility as measured by the regional road infrastructure of Germany’s 401 NUTS III regions. We identify a robust negative association between the number of infected cases per capita and average travel time on roads to the next major urban center. What has been a hinderance for economic performance in good economic times, appears to be a benevolent factor in the COVID-19 pandemic: bad road infrastructure. Using road infrastructure as an instrument for mobility reductions we assess the causal effect of mobility reductions on infections. The study shows that keeping mobility of people low is a main factor to reduce infections. Aggregating over all regions, our results suggest that there would have been about 55,600 infections less on May 5th, 2020, if mobility at the onset of the disease were 10 percent lower.
{"title":"The benefits of remoteness – digital mobility data, regional road infrastructure, and COVID-19 infections","authors":"Astrid Krenz, H. Strulik","doi":"10.1515/GER-2020-0068","DOIUrl":"https://doi.org/10.1515/GER-2020-0068","url":null,"abstract":"Abstract We investigate the regional distribution of the COVID-19 outbreak in Germany. We use a novel digital mobility dataset, that traces the undertaken trips on Easter Sunday 2020 and instrument them with regional accessibility as measured by the regional road infrastructure of Germany’s 401 NUTS III regions. We identify a robust negative association between the number of infected cases per capita and average travel time on roads to the next major urban center. What has been a hinderance for economic performance in good economic times, appears to be a benevolent factor in the COVID-19 pandemic: bad road infrastructure. Using road infrastructure as an instrument for mobility reductions we assess the causal effect of mobility reductions on infections. The study shows that keeping mobility of people low is a main factor to reduce infections. Aggregating over all regions, our results suggest that there would have been about 55,600 infections less on May 5th, 2020, if mobility at the onset of the disease were 10 percent lower.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"85 1","pages":"257 - 287"},"PeriodicalIF":1.1,"publicationDate":"2021-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86857503","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We study how model uncertainty affects the understanding of the interest rate persistence using a generalized Taylor-rule function covering numerous submodels via model average approach. The data-driven weights can be regarded as a measure of power-sharing across monetary policy committee members. We show that the model uncertainty is important in Canada, France, and Sweden, and the implied weights indicate that the U.K. and the U.S. have a lower model uncertainty caused either by an over-influential chairman or the consistent agreement of committee members. The importance of model uncertainty can be emphasized by sequential estimation during the 2008 financial crisis.
{"title":"Interest Rate Persistence and Monetary Policy Rule in Light of Model Uncertainty","authors":"Shou-Yung Yin, Chang‐Ching Lin, Ming‐Jen Chang","doi":"10.2139/ssrn.3763582","DOIUrl":"https://doi.org/10.2139/ssrn.3763582","url":null,"abstract":"Abstract We study how model uncertainty affects the understanding of the interest rate persistence using a generalized Taylor-rule function covering numerous submodels via model average approach. The data-driven weights can be regarded as a measure of power-sharing across monetary policy committee members. We show that the model uncertainty is important in Canada, France, and Sweden, and the implied weights indicate that the U.K. and the U.S. have a lower model uncertainty caused either by an over-influential chairman or the consistent agreement of committee members. The importance of model uncertainty can be emphasized by sequential estimation during the 2008 financial crisis.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"40 1","pages":"145 - 190"},"PeriodicalIF":1.1,"publicationDate":"2021-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81526378","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract It is believed that if there is no informational asymmetry between firms and the government, firms could be remunerated for innovation using optimal taxation rather than patents. We show that under reasonable conditions (such as the government’s inability to customise the tax rate for each firm), patent protection is preferable to a tax/subsidy scheme if the marginal costs of the imitators are sufficiently higher than that of the innovator. Otherwise, the tax/subsidy scheme is preferable. These results hold under Cournot and Bertrand competition with product differentiation, but not for the case of Bertrand competition with homogeneous products. We rationalise these findings as the results of a trade-off between the distortions induced by monopoly under patents and production inefficiency under the tax/subsidy scheme.
{"title":"Patents versus rewards: the implications of production inefficiency","authors":"A. Bagchi, A. Mukherjee","doi":"10.1515/ger-2019-0092","DOIUrl":"https://doi.org/10.1515/ger-2019-0092","url":null,"abstract":"Abstract It is believed that if there is no informational asymmetry between firms and the government, firms could be remunerated for innovation using optimal taxation rather than patents. We show that under reasonable conditions (such as the government’s inability to customise the tax rate for each firm), patent protection is preferable to a tax/subsidy scheme if the marginal costs of the imitators are sufficiently higher than that of the innovator. Otherwise, the tax/subsidy scheme is preferable. These results hold under Cournot and Bertrand competition with product differentiation, but not for the case of Bertrand competition with homogeneous products. We rationalise these findings as the results of a trade-off between the distortions induced by monopoly under patents and production inefficiency under the tax/subsidy scheme.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"25 1","pages":"215 - 234"},"PeriodicalIF":1.1,"publicationDate":"2020-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77697366","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
C. Dudel, Jan Marvin Garbuszus, Notburga Ott, M. Werding
Abstract Most equivalence scales that are applied in research on inequality do not depend on income, even though there is strong empirical evidence that equivalence scales are actually income-dependent. This paper explores the consistency of results derived from income-independent and income-dependent scales. We show that applying income-independent scales when income-dependent scales would be appropriate leads to violations of the transfer principle. Surprisingly, there are some exceptions, but these require unrealistic and strong assumptions. Thus, the use of income-dependent equivalence scales almost always leads to different assessments of inequality than the use of income-independent equivalence scales. Two examples illustrate our findings.
{"title":"Income-(in)dependent equivalence scales and inequality measurement","authors":"C. Dudel, Jan Marvin Garbuszus, Notburga Ott, M. Werding","doi":"10.1515/ger-2020-0008","DOIUrl":"https://doi.org/10.1515/ger-2020-0008","url":null,"abstract":"Abstract Most equivalence scales that are applied in research on inequality do not depend on income, even though there is strong empirical evidence that equivalence scales are actually income-dependent. This paper explores the consistency of results derived from income-independent and income-dependent scales. We show that applying income-independent scales when income-dependent scales would be appropriate leads to violations of the transfer principle. Surprisingly, there are some exceptions, but these require unrealistic and strong assumptions. Thus, the use of income-dependent equivalence scales almost always leads to different assessments of inequality than the use of income-independent equivalence scales. Two examples illustrate our findings.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"11 1 1","pages":"235 - 255"},"PeriodicalIF":1.1,"publicationDate":"2020-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84889645","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We assess whether the partisanship of local councils affects the level and composition of local public spending by German municipalities. Our identification strategy exploits changes in the party with the absolute majority in the local council, combining an instrumental variable strategy with a matching approach to address potential selection into treatment. We find evidence for strong partisan effects: Communities with a left-wing council majority spend more on ‘people-oriented’ public goods and less on infrastructure than communities with a right-wing dominated council.
{"title":"Do political parties matter? Evidence from German municipalities","authors":"Nadine Riedel, M. Simmler, C. Wittrock","doi":"10.1515/ger-055-19","DOIUrl":"https://doi.org/10.1515/ger-055-19","url":null,"abstract":"Abstract We assess whether the partisanship of local councils affects the level and composition of local public spending by German municipalities. Our identification strategy exploits changes in the party with the absolute majority in the local council, combining an instrumental variable strategy with a matching approach to address potential selection into treatment. We find evidence for strong partisan effects: Communities with a left-wing council majority spend more on ‘people-oriented’ public goods and less on infrastructure than communities with a right-wing dominated council.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"85 1","pages":"153 - 198"},"PeriodicalIF":1.1,"publicationDate":"2020-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85863600","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We examine gender differences when eliciting distributional preferences as conducted by the Equality Equivalence Test, which has the ability to classify subjects into preferences types. Preferences are elicited when individuals interact with an individual of the same gender and with an individual of the opposite gender. We find elicited preferences are robust across both in-group (same gender) and out-group (opposite gender) interactions. When analyzing the intensity of benevolence (or malevolence) we find that overall women exhibit more malevolence than men, but there is no gender difference for benevolence. Furthermore, women exhibit a higher level of in-group favoritism than men.
{"title":"In-group, out-group effects in distributional preferences: the case of gender","authors":"T. Jaber-López, Alexandra Baier, Brent J. Davis","doi":"10.1515/ger-2019-0119","DOIUrl":"https://doi.org/10.1515/ger-2019-0119","url":null,"abstract":"Abstract We examine gender differences when eliciting distributional preferences as conducted by the Equality Equivalence Test, which has the ability to classify subjects into preferences types. Preferences are elicited when individuals interact with an individual of the same gender and with an individual of the opposite gender. We find elicited preferences are robust across both in-group (same gender) and out-group (opposite gender) interactions. When analyzing the intensity of benevolence (or malevolence) we find that overall women exhibit more malevolence than men, but there is no gender difference for benevolence. Furthermore, women exhibit a higher level of in-group favoritism than men.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"22 1","pages":"199 - 214"},"PeriodicalIF":1.1,"publicationDate":"2020-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81280365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Patients often rely on the advice of their general practitioner (GP) to decide which treatment best fits their needs. Hospitals, in turn, might influence GPs’ referral decision through kickbacks. We present a model with a monopolistic hospital and competitive GPs who vary in the degree of altruism towards their heterogeneous patients and show that an equilibrium without crowding out exists that separates GPs into referrers and care providers. Naïve patients visit purely selfish (referring) GPs, while rational patients sort themselves between the two groups of GPs. Finally, we investigate the scope for regulation, including an optimal coinsurance rate.
{"title":"Survival of altruistic gatekeepers: Kickbacks in medical markets","authors":"E. Amann, S. Felder","doi":"10.1515/ger-2020-0007","DOIUrl":"https://doi.org/10.1515/ger-2020-0007","url":null,"abstract":"Abstract Patients often rely on the advice of their general practitioner (GP) to decide which treatment best fits their needs. Hospitals, in turn, might influence GPs’ referral decision through kickbacks. We present a model with a monopolistic hospital and competitive GPs who vary in the degree of altruism towards their heterogeneous patients and show that an equilibrium without crowding out exists that separates GPs into referrers and care providers. Naïve patients visit purely selfish (referring) GPs, while rational patients sort themselves between the two groups of GPs. Finally, we investigate the scope for regulation, including an optimal coinsurance rate.","PeriodicalId":46476,"journal":{"name":"German Economic Review","volume":"189 1","pages":"1 - 25"},"PeriodicalIF":1.1,"publicationDate":"2020-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73259587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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