Macroeconomics Department Publications

German Economy Slowly Recovering Following a Deep Slump: DIW Economic Outlook

The coronavirus recession has left deep marks on the German economy and despite economic policy action, it is likely to heal only slowly. The partial easing of the lockdown and a gradual revival of global value chains are generating positive stimuli, but massive income losses will curb demand for some time to come. The German Federal Government was able to avoid the worst by implementing measures to ...

Coronavirus Pandemic Plunging Global Economy into a Serious Recession: DIW Economic Outlook

The consequences of the ongoing 2020 coronavirus pandemic are leaving deep marks on the global economy. In the first quarter of 2020, global production sank by 15.5 percent over the course of the worldwide lockdown. Since containment measures in many countries were mainly implemented during the second quarter of 2020, the slump in the first half of 2020 is likely to be even more severe overall. Due ...

Germany Hit Hard by the Global Recession as Uncertainty Weighs Heavy: Editorial

Identifying Effective Combinations of Economic Policy Measures for the Coronavirus Recession in Europe

As the coronavirus pandemic spread across the globe in early 2020, the European Central Bank as well as national governments in the euro area enacted or announced numerous economic policy measures to counteract the severe economic consequences of the resulting lockdowns. In this paper, the immediate effect of the announcements on government bond and stock markets are estimated in a panel study. The ...

Financial Market Participants Expect the Coronavirus Pandemic to Have Long-Lasting Economic Impact in Europe

Market participants are generally in agreement that the coronavirus pandemic will have a severe impact on the European economy, but it is difficult to predict the length and extent of the pandemic’s effects. However, using the yield curves of corporate bonds, we can reach some preliminary conclusions about the impact of the pandemic. The expectations of financial market participants are revealed in ...

Government Bonds: European Banks Still Display Strong Home Bias: Requiring Capital Backing Could Worsen Problem

The European sovereign debt crisis illustrated how the stability of the entire financial system suffers when banks and sovereigns become too intertwined. However, there has been seemingly little success in reducing the bank-sovereign nexus in the decade since the crisis. As this Weekly Report shows, home bias remains strong and many European banks are still primarily purchasing domestic government ...

Price Stability and Climate Risks: Sensible Measures for the European Central Bank

By the end of 2020, the European Central Bank (ECB) will present the results of its monetary policy strategy review. What changes are to be expected and what changes are needed? This report covers two areas of the strategy review. First, alternatives to the current definition of price stability are discussed. Current studies and the practices of other central banks indicate that supplementing the ...

Coronavirus Plunges the German Economy into Recession: DIW Economic Outlook

The spread of the coronavirus worldwide is exerting considerable pressure on the economy. Compounded by the lack of quality data, model uncertainty, and uncertainty over government responses, economic forecasts are subject to even greater uncertainty than usual. It is difficult to predict how the pandemic will progress. Figures on the impact of the virus, obtained by comparing it with previous epidemics, ...

Coronavirus Causing Major Economic Shock to the Global Economy: DIW Economic Outlook

The ongoing corona pandemic is causing a major shock to the global economy. In the coming months, many countries are expected to suffer severe economic downturns. Sealing off entire regions disrupts supply chains, resulting in production losses and falls in consumption. The global economy is expected to grow by as little as 2.5 percent this year instead of by the 3.7 percent forecasted previously. ...

German Economy in Recession: Bridging Pinch Points, Building Confidence, Boosting Demand: Editorial