ifo Institute: Economists Applaud Government Aid for Fighting the Coronavirus Crisis
Economists at German universities are in favor of the German government’s aid measures. These are the results of the ifo Economists Panel, a joint undertaking with FAZ, in which 155 professors took part. Two-thirds of the respondents considered the supplementary budget of EUR 156 billion to be appropriate. “At this point it’s becoming clear how important it was to have rejected calls for greater debt in recent years,” says Niklas Potrafke, Director of the ifo Center for Public Finance and Political Economy. “Now we really are in an emergency situation and have the means to respond appropriately.”
Regarding European aid, 48 percent welcome the European Central Bank’s EUR 750 billion bond-buying program; 20 percent are against it. As far as an expansion of the EU’s fiscal powers is concerned, 62 percent reject it and only 27 percent think it is a good idea. Only a wafer-thin majority of the economists – 46 percent – are in favor of a one-off incurring of debt to combat the coronavirus crisis; 43 percent reject these “coronavirus bonds.”
Almost half the economists believe that company closures should end after a few weeks due to the excessive economic costs they entail, citing eight weeks on average as the upper limit. The average for the maximum time that Germany could endure the shutdown is somewhat higher at eleven weeks. According to the economists, Germany could hold out this long before the risk of economic destabilization becomes too great. Many of the economists point out that an ethically sensitive conflict of objectives is at play here: measures to prevent the spread of the virus are pitted against ending the economically damaging shutdown. Only 47 participants recommend retaining the containment measures until medical care is comprehensively secured for all citizens.
