Kiel Institute for the World Economy

About: Kiel Institute for the World Economy is a facility organization based out in Kiel, Germany. It is known for research contribution in the topics: Foreign direct investment & Productivity. The organization has 318 authors who have published 1909 publications receiving 42832 citations. The organization is also known as: Institut für Weltwirtschaft an der Universität Kiel.

The Dynamics of European Inflation Expectations

Abstract: We investigate the relevance of the Carroll’s sticky information model of inflation expectations for four major European economies (France, Germany, Italy and the United Kingdom). Using survey data on household and expert inflation expectations we argue that the model adequately captures the dynamics of household inflation expectations. We estimate two alternative parametrizations of the sticky information model which differ in the stationarity assumptions about the underlying series. Our baseline stationary estimation suggests that the average frequency of information updating for the European households is roughly once in 18 months. The vector error-correction model implies households update information about once a year.

Indirect transfers in trade among former Soviet Union Republics: Sources, patterns and policy responses in the Post‐Soviet period

Abstract: THE FORMER SOVIET UNION (FSU) was composed of 15 republics which were very unevenly endowed with human, physical and natural resources. To contain regional imbalances within the Union and to integrate all republics into a tight and centrally commanded division of labour, the central government operated a scheme of vertical fiscal redistribution between the Union budget and the republican budgets. Through this system poorer republics became net receivers of direct transfers and richer republics became net donors. This scheme, which collapsed with the dissolution of the Union in 1991, channelled sizeable funds to the poorer Central Asian republics relative to their material product. Yet it failed to equilibrate large existing differences between the per capital fiscal revenues of the republics (Orlowski, 1992). Budgetary support through direct transfers, however, was not the only mechanism to redistribute income between the republics. Inter-republican trade flows in which prices for goods were set by the authorities independently from the market mechanism became the second, even more powerful channel of income transfers. Whenever such prices diverge from the level which would be determined by the free interaction of market forces, trade flows include a transfer element. Importers of overpriced goods 'donated' parts of their income to the exporting countries. So did exporters of underpriced products vis-a-vis importers. Such implicit transfers were not unique to trade between centrally planned economies. They have sometimes also been included in trade flows between market economies.' Yet, in contrast to market economies, they were a central element in trade among centrally planned economies and constituted an important mechanism of inter-state income redistribution. To abandon such a system at short notice can result in severe adjustment problems in net recipient countries, especially if import demand is price inelastic and domestic substitutes are not available. More specifically, this is because importers of oil and gas will have to pay much higher prices for their deliveries when low, preferential prices are no longer available to them, since they do not have alternative supply sources. To

Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets

Abstract: "Top down" spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets. This paper analyzes the effects of these spillovers using firm-level data from 31 emerging market economies. We assess how sovereign risk affects corporate access to international capital markets, in the form of external credit (loans and bond issuances) and equity issuances. The study first analyzes the impact of sovereign debt crises during the 1980s and 1990s. It goes on to examine the 1993 to 2007 period, using additional measures of sovereign risk-sovereign bond spreads and sovereign ratings-as explanatory variables. Overall, we find that sovereign default risk is a crucial determinant of private sector access to capital, be it external debt or equity. We also find that crisis resolution patterns matter and that defaults towards private creditors have stronger adverse consequences than defaults to official creditors.

Delineating metropolitan areas using land prices

Abstract: This paper proposes an approach to delineating metropolitan areas that is more general than the standard approaches in three respects: First, it uses the fraction of land prices attributable to economies of urban agglomeration instead of using com- muting intensities as an indicator of economic integration between metropolitan centers and their hinterlands. Second, it identifies metropolitan centers endogenously instead of determining them exogenously. And third, it takes metropolitan subcenters explicitly into account. An empirical illustration is used to show that the approach tends to de- lineate fewer but larger metropolitan areas in densely populated regions, and smaller metropolitan areas in sparsely populated regions. 1. MOTIVATION Metropolitan areas play an important role as subjects of regional eco- nomic policy, urban planning, and economic analysis in various countries. The metropolitan statistical areas (MSA) in the U.S. or the functional urban regions (FUR) in Western Europe are prominent examples. Metropolitan areas are usu- ally defined as sets of consecutive local administrative areas that comprise at least one larger core city and the adjacent administrative areas that have a high degree of social and economic integration with that core city (e.g., USCB, 2006). In virtually all delineations of metropolitan areas, the commuting inten- sity between a local administrative area and a core city is used as the indicator for the degree of economic integration. The U.S. MSAs, for example, comprise at least one core city with a population of 50,000 or more as well as any adjacent counties from where at least 25 percent of the employed residents commute to the core city's county (OMB, 2000). Similarly, the Western European FURs com- prise at least one core "urbanized area" with 20,000 or more jobs as well as any adjacent NUTS3 regions from where more workers commute to that core than to any other core (Cheshire and Hay, 1989). See Karlsson and Olsson (2006) for a recent survey of the various commuting-based delineation concepts.

What makes a successful export? Evidence from firm‐product‐ level data

Abstract: We analyse a very rich and unique panel database that provides information on exports at the firm-product level. Motivated by the recent theory of multi-product firms, we investigate what determines the survival of products in the export mix to find that, in export dynamics, characteristics of the product as well as that of the firm matter. In particular, firm productivity as well as product scale and tenure are associated with a higher export survival rate. This suggests, in line with theory, that there are firm- as well as firm-product-specific competencies that are important for shaping firms’ export mix. On analyse une base de donnees unique et tres riche qui fournit des renseignements sur les exportations au niveau du produit et de la firme. Motive par une theorie recente des firmes multi-produits, les auteurs examinent ce qui determine la survie des produits dans le melange des exportations. On decouvre que dans la dynamique des exportations, les caracteristiques des produits et de la firme comptent. En particulier, la productivite de la firme tout autant que l’echelle et la perennite du produit sont associees a un taux de survie plus eleve de l’exportation. Voila qui suggere que, comme le veut la theorie, qu’il existe des competences specifiques de la firme tout autant que des competences attachees a la jonction firme-produit qui sont importantes dans la conformation du melange d’exportations des firmes.