Joachim Jungherr


University of Bonn
Institute for Macroeconomics and Econometrics
Kaiserplatz 7-9, 4th floor
53113 Bonn, Germany
joachim.jungherr@uni-bonn.de

About me:
I am a Post-doc Researcher at the Institute for Macroeconomics and Econometrics of the University of Bonn (Germany). Before joining Bonn, I was a Post-doc at the Institut d'AnÓlisi Econ˛mica (IAE-CSIC), MOVE, and Affiliated Professor at the Barcelona Graduate School of Economics in Barcelona (Spain). I received my PhD from the European University Institute in Florence (Italy). A detailed CV can be found here.





Working Papers










Debt Dilution and Debt Overhang
(with Immo Schott)
(New Version: August 2018, submitted)

Barcelona GSE Working Paper 997

We introduce long-term debt (and a maturity choice) into a dynamic model of firm financing and production. This allows us to study two distortions which are absent from standard models of short-term debt: (1.) Debt dilution distorts firmsĺ choice of debt; (2.) Debt overhang distorts investment. In a dynamic model of production, leverage, and debt maturity, we show that the two distortions interact to reduce investment, increase leverage, and increase the default rate. We find that the macroeconomic effects of debt dilution and debt overhang can be important: A financial reform which increases investment, output, and welfare in a standard model of short-term debt can have the opposite effect in a model with short-term debt and long-term debt.











A Blessing in Disguise? Market Power and Growth with Financial Frictions
(with David Strauss)
(August 2017)

Barcelona GSE Working Paper 998

Firm market power raises growth in the presence of financial frictions. The reason is that self financing becomes more effective if firm earnings are higher. We test this mechanism using Korean manufacturing data 1963-2003. We find that more concentrated sectors grow faster. This positive empirical relationship between concentration and growth gets weaker as credit becomes more abundant. Using a simple growth model, we study counterfactuals. The observed rise of concentration in Korea until the mid-1970s has increased manufacturing value added 1963-2003 on average by at least 0.6% per year. The effect of firm market power on worker welfare is ambiguous.


Work in Progress










Slow Debt, Deep Recessions
(with Immo Schott)
(December 2018)

Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms borrow long-term can replicate the sluggish adjustment of firm debt. In the model, slow-moving debt has important effects for real activity. High levels of firm debt issued during expansions are only gradually reduced during the subsequent downturn. This generates an adverse feedback loop between low investment and high credit spreads and thereby amplifies the downturn. Sluggish deleveraging slows down the recovery. The equilibrium is constrained inefficient because firms exert an externality on the holders of previously issued debt. We study optimal stabilization policies. State-contingent debt taxes and investment subsidies can reduce macroeconomic volatility by about one third.


Publications




Bank Opacity and Financial Crises
Journal of Banking & Finance, Vol. 97, December 2018, pp. 157-176

Working Paper; Barcelona GSE Focus

This paper studies a model of endogenous bank opacity. Why do banks choose to hide their risk exposure from the public? And should policy makers force banks to be more transparent? In the model, bank opacity is costly because it encourages banks to take on too much risk. But opacity also reduces the incidence of bank runs (for a given level of risk taking). Banks choose to be inefficiently opaque if the composition of their asset holdings is proprietary information. In this case, policy makers can improve upon the market outcome by imposing public disclosure requirements (such as Pillar Three of Basel II). However, full transparency maximizes neither efficiency nor stability. The model can explain why empirically a higher degree of bank competition leads to increased transparency.


Teaching

During the fall of 2018, I am teaching the first half of Macroeconomics in the M.Sc. in Economics of the University of Bonn.

In spring 2019, I will teach a course on Financial Frictions and Macroeconomics in the Macroeconomic Policy and Financial Markets Program of the Barcelona GSE.

                         



Last updated: December 2018