Macroeconomics Department Publications

Global Economy: USA and China Leading the Way, Europe Lagging Behind: DIW Economic Outlook Spring 2021

The resurgence of the pandemic and renewed lockdowns have slowed the recovery of the global economy, but the overall losses will be less severe than after the first coronavirus wave in spring 2020. Industry in particular continues to develop well. In contrast, retail trade and personal services have been heavily affected, especially in hard-hit regions such as Europe. However, the fiscal stimulus cushions ...

German Economy Stuck in Stop-Go Situation: Editorial

Fiscal Rules Mitigate Economic Setbacks during Crises

91 countries around the world have established fiscal rules to limit national debt and/or budget deficits. Using data from previous natural disasters, this report investigates how these fiscal rules affect overall economic development following a crisis. The results show countries with fiscal rules fare better after such shocks than those without. GDP, private consumption, and investments develop markedly ...

Global Economy: Recovery Slowing Down: DIW Economic Outlook

The global economy recovered more quickly than expected in the third quarter of 2020. Following the coronavirus-related slumps, economic output increased by seven percent. A decrease in infection rates and thus an easing of containment measures contributed to re-normalizing production processes and trade. Private households also began demanding more consumer goods again, especially personal services. ...

Second Coronavirus Wave Affecting German Economy and Halting Recovery: Editorial

German Economy: On the Long, Slow Road to Normality: DIW Economic Outlook

The German economy has bottomed out, but its recovery is going to be long and arduous. Nevertheless, following the almost two-digit slump in economic output in the second quarter of 2020, recovery is likely to be accompanied by above-average rates. However, it is assumed that a second wave will not occur and lockdown-like measures will not be reimplemented. Private consumption in particular will markedly ...

Global Economy: Slow Recovery Following Deep Recession: DIW Economic Outlook

The coronavirus pandemic caused a global market crash in the first half of 2020. Following a massive slump of around four percent in the first quarter, global GDP decreased in the second by five percent. Lower rates of new infections, together with far-reaching monetary and fiscal policy measures to dampen the economic impact of the pandemic, ensure that production and the trust of consumers and firms ...

Economic Outlook Better than Expected Despite Pandemic: Editorial

Bank Levies Can Make Bank Balance Sheets More Resilient, but High Corporate Tax Rates Dampen the Effect

Following the global financial crisis of 2008/2009, many European countries introduced bank levies to enable financial institutions to share in the costs of future banking crises via resolution and restructuring funds. Simultaneously, bank levies can set an incentive for banks to reduce their leverage, thereby achieving a more stable capital structure. Using information from banks’ balance sheets, ...

European Bank Deposit Insurance Could Cushion Impact of Corona-Induced Corporate Insolvencies

The European banking union has so far lacked its third pillar: a joint insurance fund for bank savings deposits. As the present study shows, this could be a major disadvantage in dealing with the economic impact of the corona pandemic. A scenario in which a wave of corporate insolvencies leads to loan and deposit losses reaching six percent over a year would over- whelm Germany’s national deposit insurance ...