Research
ICT | Economic crisis | Productivity | Service industry | Enterprise | Digitisation
Companies investing in digital technologies are better equipped to overcome economic crises.

Companies with a high degree of digitalisation were less affected by the economic crisis of 2008 and 2009 than companies with a low digitalisation level. This holds particularly for companies in the service sector. These are the findings of a recent study carried out by the Mannheim Centre for European Economic Research (ZEW).

Research
ZEW-Energiemarktbarometer | Energy pricing policy | Energy Policy | Energy market | Energy source | Power Industry
Trend towards stable prices for almost all energy sources in the short term.

The price of the different energy sources is set to stagnate over coming six months. This is the result of the latest ZEW Energy Market Barometer, a survey carried out by the Mannheim Centre for European Economic Research (ZEW) among energy market experts. The majority of the surveyed experts expect wholesale prices for electricity (71 per cent), crude oil (77 per cent), natural gas (81 per cent) and coal (79 per cent) to remain stable. The experts’ expectations are, however, quite different when it comes to the price development in the medium term. Around 75 per cent of the respondents anticipate increases in wholesale electricity prices in the upcoming five years. The survey shows similar expectations for global crude oil prices (67 per cent) and natural gas prices in Germany (63 per cent).

Research
EU Commission | Cartel | Antitrust enforcement | Automobile industry
Antitrust officials have recently been investigating allegations against German car manufacturers. In the fight against cartels, the EU leniency programme has proven to be an effective detection tool.

Corporate leniency programmes have become a vital instrument in the fight against cartels in many industrialised countries. Firms involved in cartels can benefit from such leniency programmes, which allow them to receive full or partial immunity from fines imposed by the Commission in exchange for providing evidence as a chief witness. Whether the fine is reduced or waived entirely depends on the quality of information provided and its value to the specific case. This programme can, however, create incentives for firms involved in price-fixing conspiracies to apply for leniency in exchange for providing evidence, as has been observed in the recent allegations of collusion among German car manufacturers. In an empirical study, the Centre for European Economic Research (ZEW), Mannheim, has investigated how leniency applicants differ from other cartel members who have been fined by the European Commission for cartel infringements.

Research
Real estate market | Regulation | Real Estate Services | Real estate financing
In the event that the German residential real estate market is faced with the imminent threat of overheating, the government will be able to set upper limits on individual loans.

In order to prevent the residential real estate market from potentially overheating, German law-makers have created a number of what are known as “macroprudential tools” to be implemented in the mortgage market. If these new regulations are actually to be put into practice, however, this should be done with caution. Given the already far-reaching regulation of residential real estate financing and the fact that lending practices are already intended to encourage stability, this could run the risk of crossing the line into over-regulation. These measures could particularly inhibit home-ownership among German households with limited equity but a high regular income looking to buy relatively cheap housing.

Awards
ZEW Summer Workshop | Award | Heinz König Young Scholar Award | Research Award
Heads of ZEW Research Group Kai Hüschelrath (l.) and Vitali Gretschko (r.) with the winners Jiekai Zhang and Bernhard Kasberger.

The Mannheim Centre for European Economic Research (ZEW) has presented this year’s Heinz König Young Scholar Award to two young researchers. The recipients of the award were Jiekai Zhang from the Centre de Recherche en Économie et en Statistiques (CREST) at the École Nationale de la Statistique et de l’Administration Économique (ENSAE) ParisTech and Bernhard Kasberger from the University of Vienna. Jiekai Zhang was awarded the prize by ZEW in recognition of her research into the effects of regulated TV advertising for both TV viewers and advertisers while Bernhard Kasberger was recognised for his work on the efficiency of mobile communications markets following frequency auctions.

Information Economy
Sectoral development | Sectoral business cycle | Germany | Information Services | Industry report

Economic sentiment among companies in the German information economy sector has been largely positive in the second quarter of 2017. The ZEW sentiment indicator is currently at a high level of 67.7 points, signalling that the majority of companies have a positive view of the economic climate in this sector of the economy. This represents an increase of 0.9 points compared to the previous quarter. This is the finding of a survey conducted among firms in the German information economy by the Mannheim Centre for European Economic Research (ZEW) in June 2017.

Comment
Monetary policy decisions | Interest rate policy | United States | Interest Rate | Federal Reserve Bank

The Federal Reserve decided to keep its interest rates unchanged in July after it hiked its benchmark rates up to between 1.0 to 1.25 per cent one month ago. The central bank announced it would begin rolling back its massive balance sheet “relatively soon”. However, it still remains unclear, when exactly this will be. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Mannheim Centre for European Economic Research (ZEW), offers his view on the Fed’s decision.

China Economic Panel
China | Cyclical indicator | Short-term forecast | Greater China | Business survey | China Economic Panel
In July, the CEP Indicator has decreased substantially and is now minus 4.1 points.

According to the current survey for July (5–19 July 2017), the economic outlook for China has declined significantly, falling by 13.8 points. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently no higher than minus 4.1 points (June 2017: 9.7 points) and thus far below the long-term average of 5.1 points.

Research
Innovation indicator | Innovation activity | Innovation Survey | Innovation | Innovation intensity | innovation capacity | Digitisation
Germany performs well in international comparison, but fails to receive a top ranking on the Innovation Indicator 2017.

In competition against the most highly innovative economies around the world, Germany has climbed up the international ranking by one place, but still cannot catch up with the leading countries, Switzerland and Singapore. The German innovation system also did not come top in the areas of economy (7th), science (11th), education and government institutions (8th in both), and civil society (13th). The area in which Germany particularly needs to catch up is digitalisation, having come in well behind other industrialised countries in 17th place.

Comment
ECB | Interest rate policy | Interest Rate

As expected, the European Central Bank (ECB) today announced that it would not be adjusting its base rates, nor would it be making any changes to its outlook on interest rate policy. This means that banks and savers will have to live with the ECB’s negative deposit rate of minus 0.4 per cent for quite a while longer. The ECB also could not bring itself to give any indication that it would soon end its current asset purchase programme under which the bank has been purchasing securities to the sum of 60 billion euros a month. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Mannheim Centre for European Economic Research (ZEW), offers his view on the ECB’s actions.

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