Team
The people behind the ifo Institute offer the very high level of expertise and experience needed to fulfill our research and service mandate.
ifo Viewpoint 249: Four-Day Work Week? No Longer in Keeping with the Times!
Debates about the number of working days per week are nothing unusual in Germany. In the 1950s, the six-day week was the norm until the unions pushed through the reduction of working hours with the slogan “On Saturday, daddy belongs to me.” After many decades in which the five-day week was the norm, Germany and other countries are now intensively discussing the introduction of a four-day week.
Ifo Viewpoint No. 173: Brexit and its Economic Implications
Forecasts are notoriously difficult to make. I am nevertheless sure that Britain’s exit from the EU, the so-called Brexit, would be a bad deal both for the Brits and for the rest of the European Union.
ifo Viewpoint 257: The Climate Bonus: An Ineffective Tool
In the ongoing debate over climate protection and rising CO2 prices, there is a growing demand to redistribute CO2 pricing revenues directly to citizens, instead of channeling them into government spending programs. In Germany, a popular tool has been proposed for this purpose: the “Klimageld” or climate bonus. This concept involves returning the CO2 pricing revenues to the public as a uniform per capita amount.
ifo Viewpoint No. 210: Time Has Come for Developing European Public Goods
Now that the EU has a newly elected Parliament and a new Commission, what should be its agenda? Traditionally, its focus has been on economic integration, for example through the single market, the euro or banking union. The EU budget is small and still mostly spent on agricultural and transfers to poorer regions. Nearly seventy years after the Coal and Steel Community, however, this emphasis is increasingly odd. European integration delivers benefits (and disintegration has costs), but it is not a sufficient answer to the challenges Europe faces today.
ifo Viewpoint 218: What Does the Temporary Reduction in VAT Achieve?
There’s no lack of money: in its fight against the coronavirus recession, the German government has launched a series of economic stimulus packages, most recently just a few days ago. One particular measure in this latest package is stoking a controversial debate: a temporary reduction in VAT. Between July 1 and December 31, 2020, the standard rate will fall from 19 percent to 16 percent and the reduced rate from 7 percent to 5 percent. This will bring tax relief to the tune of EUR 20 billion. But is this measure really a suitable way to inject strength into the economy?
ifo Viewpoint No. 194: Why We Need to React to Trump
US President Donald Trump began 2018 with a tax policy bang: he announced massive tax cuts in the US, with tax rates on corporate profits falling from 35 percent to 21 percent. With this reform Trump wants to encourage companies to invest more in the USA and to post a greater share of their global profits there.
ifo Viewpoint No. 213: Challenges of Negotiating a Free Trade Agreement between the UK and the EU
Now it is official: at the end of January, the United Kingdom left the European Union – and not in the hard Brexit some observers had feared but an orderly departure. That notwithstanding, Europe is already facing its next challenge. The exit agreement stipulates that the UK will remain a member the customs union and the common market until the end of 2020. By that time, The EU and the UK must have concluded a free trade agreement. If not, customs duties and other trade restrictions would enter into force. However, reaching such an agreement takes time.
ifo Viewpoint 237: Eight Reasons Why an Excess Profits Tax Is Not a Good Idea
There are currently increasing calls to impose a special tax on the rising profits of energy companies, also known as an excess profits tax. These companies are accused of profiting from the war in Ukraine, which has led to a shortage of energy supplies and sharply rising prices. Some politicians are stoking the mood by speaking of “war profiteers” and a “tax on greed.”
Ifo Viewpoint No. 180: The Economic Consequences of Mr. Trump
Politicians across Europe are still reeling at the shock election of Donald Trump as US President. That is understandable. They nevertheless need to snap out of it and start thinking seriously about how Trump’s triumph will impact Europe both economically and politically. The question on everybody’s lips is: how much of his election campaign rhetoric will Trump actually attempt to turn into economic policy and how should Europe react? Although his policy proposals to date have been hazy on detail, a fairly clear picture of Trump’s position has nevertheless emerged in four key areas.
ifo Viewpoint No. 198: Tariffs on cars
The escalation of the conflict between the USA and its trade partners seems inexorable. In May 2018 Donald Trump commissioned the US Department of Commerce to investigate whether car imports constitute a threat to US national security. The US Department of Commerce points out that the share of cars imported into the US market has risen from 32 percent to 48 percent over the last 20 years. Between 1990 and 2017 the number of jobs in the US automotive industry fell by 22 percent. US firms accounted for only 20 percent of global research and development expenditure in the automotive sector, and for just 7 percent of car part production. It therefore seems very likely that the US government will argue that car imports pose a threat to national security. That is, of course, no more than an excuse to impose tariffs.
ifo Viewpoint No. 186: How Germany Can Cooperate with Emmanuel Macron to Reform the Eurozone
There were sighs of relief in Germany when France elected Emmanuel Macron as President, but his victory also triggered a debate over Macron’s reform plans for the Eurozone. His critics claim that Macron wishes to turn the currency union into a transfer union against Germany’s interests. His supporters, by contrast, are calling on Germany to support Macron, or face the spectre of a Front National victory in the next elections. Both positions are unreasonable. Macron should be given time to further develop and explain his proposals for Eurozone reform. At the same time – and despite Germany’s delight at the victory of an EU-friendly president in France and its willingness to work with him – it is not the task of the German government to ensure that Macron wins the next election. He is the only person who can make that happen.
ifo Viewpoint 223: Abolishing the Debt Brake Is Not Worth It
The debt brake enshrined in Article 115 of Germany’s constitution has been the subject of controversial debate since its introduction in 2009. Critics argue that in the event of major economic slumps, the maximum permissible deficit for the federal budget of 0.35 percent of gross domestic product (GDP) is too small, even when adjusted for cyclical effects. The debt brake also leads to an excessive reduction in government debt and creates incentives to neglect public investment. Moreover, interest rates are so low that significantly more government debt can be afforded.
ifo Viewpoint No. 204: How Serious Politics Must Counter Populism
ifo President Clemens Fuest opposes false political responses to populism. He outlines the four pillars on which liberal economic policy is based: A solid foundation (competition, open markets, private property, flexible prices and wages, personal responsibility), effective regulation, openness and diversity, and a strong welfare state.
ifo Viewpoint 230: A Business Plan for a Digital and Green Transformation
Negotiations for a traffic light coalition in Germany have begun in a good atmosphere, but they will still be difficult. This is especially true for fiscal policy. Here, the task is something like squaring the circle. The green and digital transformation requires considerable private investment in addition to public investment, and the former will hardly take place without substantial tax incentives. Tax relief on investment is also important to support the increasingly fragile economic recovery. At the same time, the debt brake narrows the scope for public borrowing.
Ifo Viewpoint No. 174: Refugees Will Not Lighten Germany’s Load but Deserve Its Support
Around one and a half million people immigrated to Germany in 2015, including many from Syria, who were fleeing from the civil war in their home country. Far fewer immigrants are expected to arrive in 2016, as other European countries have closed their borders and the Balkan route has also been blocked. In the face of this wave of immigrants, Germany’s population showed an amazing willingness to help people fleeing war and political repression. That was impressive. But what are the economic implications of the immigration wave?
ifo Viewpoint 239: The Government Should Stay out of Wage Policy — Supply-Side Reforms Make More Sense in the Fight against Inflation
How can inflation be contained in Germany? Wages are currently playing a major role in this discussion. Trade unions point out that the current inflation rate of more than 8 percent is reducing employees’ real incomes.
ifo Viewpoint No. 193: Is the Grand Coalition Leading Germany towards a Transfer Union? The Euro Junktim
The CSU/CDU and the SPD are currently coming under fire for seeking to turn the Eurozone into a transfer union. Firstly, criticism is directed at their plan to enshrine the ESM euro bail out mechanism in EU law. This raises the question of whether the German veto on bail-out credit for countries with financial difficulties will be weakened. Secondly, the coalition wants to create a new fund conceived as the starting point for a future investment budget in the Eurozone. Although the coalition partners also say that the principle of linking control to liability in the Eurozone will continue to apply in the future, this is cold comfort. This principle has already been greatly weakened: not only through the bail-out credits granted to Greece that probably will never be repaid, but primarily through the TARGET balances in the ECB System. Via TARGET, Germany has granted other Eurozone countries interest-free credit worth over 900 billion euros for an undefined period of time. And this figure is rising. Germany urgently needs to scrutinise any uncontrolled increase in liability for other states. The grand coalition is doing just the opposite. It is moving in the direction of greater redistribution and joint liability. In line with these developments, Germany’s acting Finance Minister Peter Altmaier has signalled in Brussels that Germany would agree to a Eurozone deposit insurance scheme. He has warned that the volume of bad loans in the banking system needs to be reduced but this is not enough.
ifo Viewpoint 220: It Is Time to Expand the Tax Loss Carryback
The coronavirus pandemic plunged the German economy into a severe recession. Following a recovery over the summer, growing numbers of infections give reason to fear that autumn will be difficult.
ifo Viewpoint 226: Does Compulsory Insurance for Natural Disasters Help?
The dramatic flood damage in the German states of Rhineland-Palatinate, North Rhine-Westphalia, and to some extent also in Bavaria and Saxony has revived the debate about compulsory insurance for damage from natural disasters. Currently, there is no obligation for homeowners in Germany to insure themselves against flood damage. About 46 percent of all buildings are insured voluntarily, but there are large differences within Germany. In Baden-Württemberg, 94 percent have insurance, while the figure in the particularly hard-hit Rhineland-Palatinate is currently 37 percent, and in Bremen, only 23 percent.
ifo Viewpoint 247: The German Economic Model – Decline or Second Economic Miracle?
What is the future of Germany’s economic model? The Russian attack on Ukraine has triggered a debate about the further development of prosperity in Germany.