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 238: Don’t Raise the Eurozone’s Public-Debt Limit
In February 2020, the European Commission announced that it would present a plan for reforming the eurozone’s economic governance, including the rules for public debt. After a lengthy postponement due to the Covid-19 pandemic, the project is now back on the table, amid widespread calls to give governments more leeway, for example to finance climate protection spending.
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 251: The Equity Pension – How It Can Mitigate the Demographic Problem of German Pension Insurance
Demographic change poses major challenges for German pension insurance: if fewer and fewer contributors face more and more pensioners, contribution rates will have to rise or pension benefits will have to fall. If the aim is to avoid both these outcomes, the pension fund will have to be supported from outside. Up to now, this has been done primarily through subsidies from the federal budget – a method that is increasingly reaching its limits. The German government now wants to help stabilize pension finances with what is known as the equity pension.
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 241: Europe Must Avoid a Subsidy Race
The energy crisis – especially the shortage of gas due to a loss of supplies from Russia – is plunging Europe into recession and causing social tensions and distributional conflicts. European governments are eagerly seeking ways to defuse the situation, but they will succeed only if they cooperate closely. The cross-border energy market must remain open, and the European Union should leverage its market power when purchasing gas in third countries. But without coordinated national crisis-management strategies, Europe’s response could become a self-defeating subsidy race.
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 259: What Can Be Done About the Housing Shortage?
The German housing market is under significant strain, particularly in urban areas where finding rental apartments has become increasingly challenging. One common indicator of housing scarcity is the percentage of households living in overcrowded conditions. Statistically, a dwelling is considered overcrowded if it has more household members than rooms.
ifo Viewpoint 232: Economic Consequences of the Covid-19 Pandemic and Lessons for Future Crises: Results from Economic Research
In addition to the damage to health, the Covid-19 pandemic caused tremendous economic costs. What can be learned from an analysis of the economic consequences and of crisis management in politics and in society? Extensive research is now available on this, although it mainly relates to the earlier phase of the pandemic: essentially experience and data from 2020. Various lessons emerge for dealing with future pandemics. The most important concerns the question of whether there is a trade-off between protecting health on the one hand and limiting economic costs on the other.
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 243: Higher Wages May Help Overcome the Shortage of Skilled Workers!
There is currently intense debate in many countries about a shortage of skilled workers. For instance in Germany, despite record employment figures, according to surveys by the ifo Institute, close to 50 percent of companies say they are constrained by a shortage of skilled workers ¬– also an all-time high. From an economic perspective, there is a simple answer to shortages: higher prices.
ifo Viewpoint 221: The Advantages of the Division of Labor also Apply to Economic Policy: The Green New Deal
Even in times of the corona pandemic, environmental and climate protection are among the dominant topics in the economic policy debate. This is justified. Global warming is one of the greatest challenges of our time.
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 240: The ECB’s Toxic Bond-Purchase Program
It is unclear why the European Central Bank has introduced a new asset-purchase instrument instead of using its existing Outright Monetary Transactions facility. By shielding countries from both market forces and political commitments, the Transmission Protection Instrument risks destabilizing European monetary union.
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 228: The Merkel Era: A Review of Budgetary and Fiscal Policy
The budgetary and fiscal policy record of the Merkel era contains both light and shade. The greatest success is that the stability of Germany’s public finances has suffered less during this period than in other countries, despite the fact that the economy had to weather the two deepest economic crises since the Second World War – the global financial crisis and the coronavirus pandemic.
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 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 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 248: The Energy Efficiency Law – A Growth Killer?
Germany’s energy policymakers are currently in the process of passing what’s known as the Energy Efficiency Act. In doing so, they are following the requirements of an EU directive. Contrary to the name, this law does not primarily regulate energy efficiency; rather, it caps the country’s total energy consumption. Final energy consumption is to be reduced significantly by 2030: by 26.5 percent compared with consumption in 2008, and by around 22 percent compared with today. It does not matter whether the energy comes from climate-neutral sources (such as wind or sun) or from fossil fuels.
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.