An Interview with Clemens Fuest and Stephanie Dittmer – Annual Report 2022
The ifo Institute expected an economic recovery in 2022. Instead, everything got worse: a war in the heart of Europe that sparked an energy crisis and record inflation. What does this mean for the ifo Institute?
Prof. Fuest, Dr. Dittmer, how do you look back on last year?
CLEMENS FUEST Russia‘s invasion of Ukraine obviously affected us as fellow citizens and members of this society, aside from the technical, economic issues. The war and the associated geopolitical shifts have brought new economic questions to the fore. How can Europe secure its energy supply? Does Germany need to reinvent itself as an export-oriented economy? How do we finance the rising defense costs? The institute has worked hard on these questions, but also on adjusting to organizational challenges such as the energy shortage.
STEPHANIE DITTMER Running an institute in a climate of ongoing crises is a new challenge. It’s about keeping an eye on everything despite the upheaval and the real need to adjust. This has kept us very busy, especially at a time when we are still dealing with the consequences of Covid.
Many people are overwhelmed by the current situation. They feel powerless. Did you ever feel the same?
CLEMENS FUEST No. In crisis situations in particular, the ifo Institute has the task and the ability to help overcome the economic challenges, provide explanations, reflect on the consequences of the crises, and inform people about them.
STEPHANIE DITTMER The intensification of research and policy advice in times of crisis places significant demands on many colleagues at the ifo. At the same time, it’s a privilege to be able to provide urgently needed information and analyses in this situation. In addition, the civil service is providing more certainty at this time than many have received in these times of crisis.
Prof. Fuest, how has the analysis of this crisis differed from others?
CLEMENS FUEST There were parallels with the coronavirus pandemic, particularly the sudden outbreak of the crisis and the high level of uncertainty regarding the economic consequences. We responded to this again in our forecasts by examining and publishing various scenarios. Once again, it has proved hugely important that the ifo Institute can provide very up-to-date information on the economic situation with its company surveys. The interactions between geopolitical and eco-nomic issues that define this crisis and set it apart from others are certainly new.
Part of your work involves advising policymakers – do you feel that they’re listening to you properly yet?
CLEMENS FUEST The ifo Institute is engaged in intensive dialog with policymakers and the administration. That doesn’t mean that I‘m always satisfied with the decisions that are taken. But that’s not what it’s about. Every now and then, there is unwelcome friction in public communication on policy advice – just think of the debate on the analysis of impacts of a suspension of gas supplies from Russia that was published in March 2022 and was partly worked on by ifo researchers. The German Chancellor calling this study irresponsible was certainly a low point. However, this shouldn’t be overstated, as policymakers were under intense pressure. Emotions have calmed down since then. It has also become apparent that industry has scaled down its gas consumption significantly without prompting a collapse in production.
There is often the impression of a tense relationship between policy advisors and academics. Can these two worlds be reconciled?
CLEMENS FUEST Research takes time, and doesn’t always address issues of direct relevance to policy advice. However, one aspect of work at the ifo Institute is that our research topics are focused on practical application. The biggest challenge is that crises are unforeseeable, and there is suddenly a great need for advice and explanation regarding issues that are not always the focus of longer-term research. Nevertheless, having a wide range of research topics, as the ifo Institute does, is the best basis for responding to new challenges quickly. Careful consideration of the relevance of the issues and results is also crucial to sound economic research.
“I‘m not always satisfied with policymakers’ decisions – but that’s not what it‘s about.”
“Research excellence is fundamental: The best minds want to work at the best research institutes.”
Dr. Dittmer, what sort of challenges does the new situation present for the management of the ifo Institute?
STEPHANIE DITTMER What strikes us most at the moment is the changes on the labor market – the low supply of qualified skilled workers, the competition for junior researchers, the generational shift. Of course, given the unpredictable energy prices and the pay rises that lie ahead, we must constantly keep a close eye on our financial situation.
Studies within the education sector have shown significant long-term effects of the coronavirus crisis on students’ attainment. How has the coronavirus crisis impacted on the ifo‘s performance?
STEPHANIE DITTMER We were very quick to convert our work at the ifo to digital formats, while it is relatively easy for much of the research work to be done from home. However, this applies to conferences and seminars only to a limited extent. These were also converted to digital formats, and we used new opportunities to organize related presentations and discussions as well as informal talks digitally. Nevertheless, it was apparent that there is no real substitute for meeting in person. We have not yet seen any negative consequences in terms of falling output. It is still too early to draw any definitive conclusions, though.
Are there any long-term consequences of the coronavirus pandemic in research as well? Female researchers in particular have to deal with an increased work-load (care work). Or does it help researchers if they can get more thinking done behind closed doors?
CLEMENS FUEST There are major differences depending on people‘s personal and family situation. Integrating new colleagues, and young researchers in particular, was difficult, as they are particularly sensitive to the lack of social interaction with others.
How do you measure excellence of work at the ifo Institute?
STEPHANIE DITTMER The ifo Institute has clearly defined objectives – excellent research, promotion of young researchers, policy advice, involvement in public debates and service, for example through the provision of data. These objectives are not mutually exclusive. For instance, research excellence is the basis for policy advice and contributions to the public debate, and research excellence would be impossible without our outstanding young researchers. We measure research excellence through publications in prestigious international journals, we measure promotion of youth through the success of our young researchers in their careers, i.e. if they are appointed to professorships or attractive posts at international organizations, companies or ministries. We measure success in policy advice through incoming consultancy mandates and the appointment of ifo researchers to policy advisory bodies.
“It’s a privilege to be able to provide urgently needed analyses in crisis situations.”
“We need to deal with the low supply of skilled workers and overcome the generational shift.”
The battle for talent reached the research sector some time ago – how can the ifo promote itself?
CLEMENS FUEST The best minds want to work at the best research institutes. That’s why research excellence is fundamental to us. In addition, the ifo has a distinctive profile that combines research, policy advice, and involvement in public debates. We also specialize in the gathering of company data and international integration in the context of the CESifo network. These special features make us highly attractive to talented employees.
Prof. Fuest, can you offer as much as a university to young people looking to forge a career in research?
CLEMENS FUEST The ifo Institute works very closely with universities, especially with the Ludwig-Maximilians-Universität in Munich. As a result, young researchers gain access to university-based research and teaching with us. At the same time, we differ from universities in that we place less emphasis on teaching, and more on policy advice and involvement in public debates. Many young people are keen to get things done in this society. Furthermore, this work opens up a wide variety of career prospects, which makes this aspect of working at the ifo particularly exciting for them. Our young researchers often go on to have successful careers: Many of them are appointed to professorships or move on to attractive posts at international organizations such as the OECD that are highly sought-after.
The interview was conducted by Dr. Cornelia Geißler, Head of Communications.
Dr. Stephanie Dittmer: A member of the ifo Institute Executive Board since September 2017, Dr. Dittmer was previously Head of Strategy and the Initiative and Networking Fund at the Helmholtz Leadership Academy, Helmholtz Association of German Research Centres e.V.
Prof. Clemens Fuest: Before becoming president of the ifo Institute in April 2016, Prof. Fuest was president and Scientific Director of the ZEW – Leibniz Centre for European Economic Research and Professor of Economics at the University of Mannheim.
