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Original Paper Frauke Schleer, Willi Semmler: Banking Overleveraging and Macro Instability: A Model and VSTAR Estimations JBNST - Vol. 236/6 - 2016, pp. 609-609.
+ show abstract- hide abstractOverleveraging of the banking sector has been considered one of the main causes of the 2007–09 financial crisis and the subsequent great recession. It was also of major concern for the subsequent BIS regulatory policies resulting in Basel III and its request for higher capital requirements. It has now become highly relevant for the planned European banking union. Overleveraging of the banking sector exposes the financial sector and the macroeconomy to vulnerabilities, but also, as critics state, seems to constrain credit flows to the private sector. We present here a measure of overleveraging, defined as the difference between actual and sustainable debt, conduct an empirical study on overleveraging for 40 banks in Europe, and study the vulnerabilities and credit contractions that can arise subsequently. Before the year 2004 overleveraging had not been a serious problem as leverage was on a sustainable level. However, in the run-up to the financial crisis, actual and optimal debt spread apart and the banking sector began to suffer from overleveraging. We use a non-linear Vector STAR model to evaluate the hypothesis that periods of increasing debt levels are accompanied by more severe credit constraints than periods of low leveraging. We demonstrate this for country groups across Europe.
Under Debate Rahel Aichele, Gabriel J. Felbermayr, Inga Heiland: TTIP and Intra-European Trade: Boon or Bane? JBNST - Vol. 236/6 - 2016, pp. 639-664.
+ show abstract- hide abstractThe European Union is the world’s deepest free trade zone. Amongst its members, it has abolished tariffs and lowered non-tariff barriers. This has led to trade creation within Europe and to trade diversion between EU countries and outsiders. Deep trade integration and the resulting mutual dependence has, in the eyes of many, facilitated political integration. The Transatlantic Trade and Investment Partnership (TTIP) will undo some of these effects by means of preference erosion, so that cross-country trade links within Europe may lose relative prominence. However, the presence of a rich fabric of regional value chains in Europe and substantial income effects could counter this development. We provide insights on the empirical importance of these effects based on a New Quantitative Trade Model. We show that TTIP could indeed lower trade integration in Europe since predicted income effects turn out not to be large enough to overcome the effects of preference erosion. However, there is substantial heterogeneity across sectors and countries. One way to minimize preference erosion would be to promote projects and programs to further deepen the EU’s single market.
Data Observer Barbara Hofmann, Markus Köhler, Michael Oberfichtner: New Register Data from the German Public Employment Service on Voluntary Unemployment Insurance JBNST - Vol. 236/6 - 2016, pp. 665-673.
+ show abstract- hide abstractIn Germany, all employed workers pay into a mandatory unemployment insurance scheme. By a reform in 2006, a voluntary unemployment insurance scheme was introduced. Under the new scheme, individuals who work abroad, as caregivers at home or who start-up as self-employed workers can insure themselves against unemployment.
Yet, little is known about this labor market policy tool partly because administrative data on the voluntarily insured workers were incomplete in the past. More specifically, only the selective sample of those voluntarily insured workers who became unemployed was observed in the data.
Aiming to close this gap and to contribute to a more complete picture on this labor market policy tool, we present new administrative data on the contribution payments to voluntary unemployment insurance. These data became available very recently. Before we describe the data and how they can be accessed, we explain the institutional setting.
Book Reviews Peter Graeff: Ina Kubbe: Corruption in Europe. Is It All about Democracy? JBNST - Vol. 236/6 - 2016, pp. 673-674.
Aleksandr V. Gevorkyan: Graham Bird and Dane Rowlands: The International Monetary Fund: Distinguishing Reality from Rhetoric JBNST - Vol. 236/6 - 2016, pp. 675-675.
Annual Reviewer Acknowledgement Peter Winker: Annual Reviewer Acknowledgement JBNST - Vol. 236/6 - 2016, pp. 679-679.
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