of the Economic Policy Center
- Bencek, D., B. Dettmer and K. Schrader (2013).
Cyprus: Island without Business Model?
Wirtschaftsdienst (93 Jg., Heft 8): S. 563-571.
►Cyprus appeared to be a South European success story until the beginning of the economic and financial crisis in the year 2008. But in early 2013 the country was at the edge of bankruptcy, the leading banks were illiquid, the economy was shrinking and unemployment was rising. Against this background it is analyzed which factors contributed to the Cyprian crash and how the country could accomplish a change for the better. Due to the lack of industrial competence it is suggested to revive the Cyprian service industry in the course of a reunification of Cyprus. A reunification could rebuild confidence lost during the crisis, create synergy effects in tourism and facilitate natural gas production.
- Boss, A. (2013).
Return of the Deficit in Germany's Social Insurance?
Kiel Policy Brief No. 63.
►In his Kiel Policy Brief 63 the Kiel economist Alfred Boss warns of the return of the deficit in Germany’s social insurance. The financial situation of the social security system in Germany has improved due to the strong upswing. Facing favorable perspectives for 2013 and 2014, the federal government reduced the transfers to social insurance drastically. The rate of contributions to social security was reduced. As a consequence, the surplus will decline despite of a favourable economic development in 2013 and 2014.
- Boysen-Hogrefe, J. (2013).
Fiscal Consolidation in Germany 2010-2012.
Kiel Policy Brief No 62.
►The Kiel Policy Brief by Jens Boysen-Hogrefe deals with the question how the budget of the German government could improve rapidly between 2010 and 2012 by more than 100 bill. Euros. His study discusses and quantifies the causes for this strong improvement. He identifies one-time items, the expiring economic stimulus package as well as varying tax ratios as main causes.
- Delzeit, R., G. Klepper and M. Lange (2013).
Fracking, globale Energiemärkte und die zukünftige Klimapolitik.
Kiel Policy Brief No. 64.
►In their new Kiel Policy Brief the IfW experts Ruth Delzeit, Gernot Klepper and Mareike Lange show that an increasing use of fracking might have serious impacts on climate policy. The production of shale gas and oil using the fracking-technology has caused decreasing energy prices, currently mainly in the USA. Additional exploitation of global reserves is likely to boost this effect on energy prices. The authors conclude that stagnant or falling prices impede the efforts of the international community to agree on measures for an effective climate protection.
- Floro, D. and Mewael F. Tesfaselassie (2013).
Can forward guidance be ambiguous yet effective?
Kiel Policy Brief No 65.
►In the recent financial crisis unconventional monetary policy, in the form of forward guidance and quantitative easing, has taken center stage. Recent moves in financial markets have challenged the notion that forward guidance can be separated from the unwinding of quantitative easing and shown that forward guidance can have perverse effects on market expectations. In an attempt to make sense of these developments, Danvee Floro (Kiel University and IfW) and Mewael F. Tesfaselassie (IfW) discuss the theory and practice of unconventional monetary policy. They argue that, caution on the part of central banks has led to policy ambiguity in communication, as manifested by the insertion of conditionality and/or by the expression of intent, belief etc., rather than commitment, to maintain accommodative policy on a certain course. Setting aside whether caution is warranted or not, vagueness seems to be driven mainly by central banks’ unwavering commitment to price stability, a commitment which is credible owing to their hard won reputation.
- Görlich, D., I. Stepanok and F. Al-Hussami (2013).
Youth Unemployment in Europe and the World: Causes, Consequences and Solutions.
Kiel Policy Brief No 59.
►The Kiel Policy Brief 59 deals with youth unemployment as one of the very important and pressing problems for many economies. The current paper presents a definition of what youth unemployment is, and discusses the causes and consequences of the phenomena. It identifies solutions for this problem from various fields of policy such as education and training, active labor market policy, employment protection and tax policy.
- Hanley, A. and E-C. Schmidt (2013).
Women Quitters in Exit Competitions. Reliable Indicators of Women’s Risk Aversion?
Kiel Policy Brief No 66.
►Women are more fearful of taking risks than men. Researchers suggest that the early exit behavior of women in gameshows such as ‘Deal or no Deal’ (risk-aversion) helps to explain the underrepresentation of women at senior levels in politics, business and management because early-exit is associated with reduced risk taking. The Kiel economists Aoife Hanley and Eike-Christian Schmidt simulate the ‘Deal or no Deal’ gameshow in Facebook and gather information on exit patterns of 483 people. They find that women, on average, exit 0.45 rounds earlier than men but that for women with comparable earnings and education to men, gender differences in risk taking are less obvious (women now exit 0.12 rounds earlier).
- Jochem, A. and S. Reitz (2013).
International Comparison of Stock Market Valuation – Evidence from a New Index.
Kiel Policy Brief No 61.
►The authors Axel Jochem and Stefan Reitz demonstrate the calculation of a new stock market index informing about the price competitiveness of a country’s assets vis-à-vis its foreign competitors. In line with the portfolio balance approach we empirically identify net foreign holdings of a country’s assets as the long-run driver of the index dynamics. Both, the index and its fundamental value are discussed for a number of important economies shading new light on relative prices of financial assets in international capital markets. We show that due to a differing risk assessment of international investors, US and German stocks currently seem to be relatively expensive, while Italian, Japanese, and, to a lesser extent, French equities come at a discount.
- Kleemann L., J. Lay, K. Nolte, K. Ott, R. Thiele und L. Voget-Kleschin (2013).
Economic and Ethical Challenges of “Land Grabs” in Sub-Saharan Africa.
Kiel Policy Brief No 67.
►Extensive land acquisitions in Sub-Saharan Africa by international investors constitute one of today’s most hotly debated development issues. Drawing on own ethical and economic research and using evidence from in-depth case studies in Kenya, Mali and Zambia, the authors of this Kiel Policy Brief argue that the land acquisitions currently imply many risks and few benefits for the local population. They offer policy recommendations for host governments, investors and the international community which could help achieve a more favourable balance of risks and benefits in land investment projects.
- Klodt, H. (2013).
Industriepolitik, Strukturpolitik, Technologiepolitik (2013).
Titelstichwörter in: Kompakt-Lexikon Wirtschaftspolitik. Springer Gabler, Wiesbaden: 187–188, 384–386, 395–397.
- Klodt, H. (2013).
Die gehemmte Marktwirtschaft – Subventionen aus gesamtwirtschaftlicher Sicht (2013).
In: Helfried Bauer, Peter Biwald, Hans Pitlik (ed.), Zur Effizienz der Förderpolitik im Bundesstaat, NW Verlag, Wien: 19–25.
►Based on the Kiel Subsidy Report the paper explores the amount and the structure of public subsidies in Germany. Furthermore, it identifies the obstacles which again and again impede a fundamental cutback of subsidies. Finally, it shows up how these obstacles could eventually be resolved by higher transparency on social costs and benefits of public subsidies.
- Klodt, H. (2013).
Keynes oder Mises? Wer hat die bessere Therapie für die Schuldenkrise?
DIW Vierteljahrshefte zur Wirtschaftsforschung 82 (2): 39-49.
►Should fiscal consolidation and scaling down public debt be given highest priority in Euro countries in crisis? Or do they need a strong fiscal stimulus from expansive government spending for overcoming their deep recessions? Here, these questions are analyzed against the background of Keynesian and Austrian business cycle theories. It is argued that the prospects for Keynesian fiscal spending crucially depend upon the availability of competitive idle capacities. If such capacities have eroded during the long phase of cheap money, a fiscal stimulus would merely foster domestic inflation and foreign imports. The empirical evidence collected in this paper tends to support the latter view which is closer to the Austrians than to the Keynesians. The paper concludes that expansive government spending in Euro countries in crisis would postpone restructuring and would add further adjustment burdens to existing ones.
- Klodt, H. (2013).
Baustelle Europa – Subsidiarität als Konstruktionsprinzip.
Wirtschaftspolitische Blätter 60 (2): 271–284.
►The European Union increasingly resembles a huge construction site with buzzing activities, but no strategic plan about the final shape of the building. As a result, public opinion about the European Union (as measured by the “Eurobarometer” poll) has substantially deteriorated in the recent past. In this paper, it is argued that European policy makers should take more seriously the idea of subsidiarity, which is an integral part of the European treaties. The case for subsidiarity is derived here from the theory of fiscal federalism and is applied to a broad range of policy fields in the European Union.
- Klodt, H. (2013).
Offene Märkte als Element der offenen Gesellschaft.
In: Lars P. Feld, Karen Horn, Karl-Heinz Paque (Hrsg.), Das Zeitalter von Herbert Giersch. Wirtschaftspolitik in einer offenen Welt, Mohr Siebeck, Tübingen: 169 – 172.
- Klodt, H. (2013).
Verdient der Markt noch unser Vertrauen?
Wirtschaftsdienst, 93. Jg. (Sonderheft): 2 – 6. (mit Gustav Horn und Brigitte Preissl).
- Klodt, H. (2013).
Verrutschte Maßstäbe und beschädigte Anker – Langzeitschäden der Rettungspakete.
In: Jürgen Simmer (Hrsg.), Impulsreden zur Sozialen Marktwirtschaft, Schriftenreihe Wirtschaftspolitischer Club Deutschland, Berlin: 4–17.
- Krieger-Boden, Ch. (2013).
New Ethics for Economics?
Kiel Policy Brief Nr. 60.
- Laaser, C-F. und A. Rosenschon (2013).
The Kiel Subsidy Report: Subsidies in Germany in the period 2000 to 2011/2012.
Kieler Diskussionsbeiträge 516./517.
►In 2011 aggregate subsidies in Germany amounted to 166.7 Billion Euro if measured according to the broadened subsidy definition as applied in the Kiel Institute’s subsidy report. The newest issue of this report has now been published. The sum of all tax privileges granted to taxpayers and all financial support payments to suppliers of private goods by German territorial entities in 2011 outstripped the pertinent sum of 2000 by 18.8 Billion Euro. In the same period, subsidies to business companies (subsidies in a narrower sense according the Kiel definition) decreased by 10.8 to 92.0 Billion Euro.
- Langhammer, R. J. (2013).
Neuordnung der Weltwirtschaft.
In: Lars P. Feld, Karen Horn, Karl-Heinz Paque (Hrsg.), Das Zeitalter von Herbert Giersch. Wirtschaftspolitik in einer offenen Welt, Mohr Siebeck, Tübingen: 153 – 158.
- Schrader K., D. Benček and C-F. Laaser (2013).
Greece: Back on Track?
Kiel Policy Brief No 68.
►The Kiel Policy Brief 68 answers the question whether the Greek economy is recovering from the deep economic crisis and, particularly, whether the country has made any progress towards structural reforms as propagated by European policy makers. Against the background of Greece’s economic potential the IfW researchers Klaus Schrader, David Benček and Claus-Friedrich Laaser also analyze whether Greece’s public debt is sustainable as presumed by the troika. The results of their analysis are rather pessimistic: Greece still lacks a new business model that could generate sustainable economic growth. The reform process has to be sped up and professionalized significantly. In the authors’ opinion a further haircut in favor of Greece seems inevitable, but with the qualification of a restricted fiscal sovereignty and the omission of further bailout packages.
- Schrader, K., (2013).
Market Economy instead of Bailout Package: The Estonian Crisis Management.
In: Friedrich Naumann Stiftung, Wohin führt uns der Fortschritt? Programm-Magazin 2/2013, Potsdam: 10-11
►In times of an apparently never ending euro-crisis and bailout packages for a growing number of crisis-ridden euro-countries, Estonia became member of the euro-zone on January 1, 2011. During the crisis Estonia managed to meet the Maastricht criteria due to a liberal economic policy and sound public finances.
- Schrader, K., D. Bencek and C-F. Laaser (2013).
Greece: Doing well again?
Kieler Diskussionsbeiträge 522./523.
►The Kiel Economists Klaus Schrader, David Bencek and Claus-Friedrich Laaser answer the question whether the Greek economy is really doing well again and whether the country has actually progressed in the field of structural reforms as propagated by European policy makers. The result of their analysis is that Greece still lacks a new business model that could generate sustainable economic growth and that the reform process has to be significantly speeded up and professionalized. In the authors’ opinion a further haircut is inevitable but only with the qualification of a restricted Greek fiscal sovereignty and the omission of further bailout packages.
- Snower D., J. Boysen-Hogrefe, K. Gern, H. Klodt, S. Kooths, C-F. Laaser, C. Reicher, B. Roye, J. Scheide
and K. Schrader (2013).
The Kiel Policy Package to Address the Crisis in the Euro Area.
Kiel Policy Brief No 58a.
►The reason why the Euro zone crisis has dragged on for so long is that Europe's leaders have focused too much on short-term measures to patch up the emergency of the moment, rather than formulating a comprehensive plan. The Kiel Policy Package - published as Kiel Policy Brief 58a - comprises a set of short-term and long-term policy measures to overcome the crisis. Neither the short-term nor the long-term measures are sufficient on their own. Instead, they need to be implemented in conjunction with one another.