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23.03.2017
 
 
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Economic Policy Center

What should be the Core of EU Competencies?

EU-FlaggenIn his Kiel Policy Brief 106 Jürgen Stehn, economist at the Kiel Institute,  asks, in how far the White Paper on the Future of Europe of the European Commission sketches promising scenarios for a future European integration process. Against the backdrop of the 60th anniversary of the Treaties of Rome the author shows that the EU Commission fails at the task to define and justify European core competencies on basis of an appropriate reference system. more … 

 

International Arbitration without Disadvantage for Respondent States

WaageSelf-interested and biased arbitrators are often held responsible for the legitimacy crisis of investor-state dispute settlement. Analyzing UNCTAD data, in his Kiel Policy Brief 105  the Kiel Institute’s researcher Peter Nunnenkamp finds no compelling evidence that arbitrators are systematically biased since the late 1990s. Many disputes are handled by unbiased tribunals, and state-appointed arbitrators are no less pro-state than investor-appointed arbitrators are pro-claimant. Furthermore, even biased tribunals decide more often in favor of respondent states that in favor of private investors. However, the author also observes that it is harder for developing countries, compared to high-income countries, to fend off claims for compensation. more … 

 

Greece still in the Crisis Mode

Flaggen-FotoliaFor eight years, Greece has remained in the crisis mode but the rescue from economic decline is still not yet within sight. In their Kiel Policy Brief 103 the Kiel Institute’s researchers Klaus Schrader, Claus-Friedrich Laaser und David Benček highlight the Greek prospects to overcome the crisis by until the end of the third economic assistance program. They show that in other EU crisis countries the programs have more or less achieved their goals while in Greece the missing ownership by the Greek decision makers and the Greek society has become a serious obstacle to the reform process. As a consequence, growth expectations have not been met and the sluggish recovery and the backward-oriented structural change do not promise a return to the former high income level of the past. The authors still regard the third assistance program as a great opportunity for Greece to overcome the crisis but the program will not work without the development of ownership. more … 

 

Cut the Unemployment Insurance Contribution!

BundesagenturIn his Kiel Policy Brief 104 the Kiel economist Alfred Boss shows that in Germany the system of unemployment insurance has been in surplus since 2011. The reserves amounted to Euro 11 bn at the end of 2016. The  author reveals that only a small part of the surplus is due to the cyclical stance of the German economy. For the most part, the surplus is rather of structural origin. Against this backdrop the author concludes that the rate of contribution to the unemployment insurance should be reduced from 3.0 to 2.7 p.c. very soon. This reduction would avoid an increase of the overall rate of contribution to social security in 2017 and would foster employment growth. more … 


Kiel Subsidy Report: All-time Peak of German Subsidies

PaketAccording to the newly published Kiel Subsidy Report of the Kiel Institute (IfW) the subsidies in Germany granted by the federal layer, the federal states, communities and special budgets reached an all-time peak with 168.7 Bill. Euro since the Kiel Institute surveys subsidy data. The sum of subsidies in 2015 surpassed the level of 2007 before the financial crisis by 27.5 Bill. Euro, and that of the last peak in 2010 by 2.5 Bill. Euro. For the budgetary year 2016 the financial grants from the federal budget will increase drastically by 18.8 per cent. more ...


Italy at the Crossroads

Strasse_FragezeichenThe Italian economy has experienced a prolonged period of economic weakness which is especially problematic given the high level of public. The constitutional reform proposed by the Renzi government is meant to reduce the institutional barriers to the implementation of structural reforms necessary to reinvigorate the economy. Against this background, in their Kiel Policy Brief 102 the IfW economists Klaus-Jürgen Gern and Ulrich Stolzenburg give an overview of the economic situation in Italy from a macroeconomic perspective and evaluate recent reform initiatives. They conclude that all in all the reform packages introduced since 2011 move in the right direction, although model-based assessments and first empirical evidence suggest that they will not fundamentally change the overall picture of relatively low potential growth. more ...


China's Growth Challenges

Dschunke2Against the background of the continuously weaker economic growth in China in the past few years, the Chinese government is convinced that the Chinese economy needs to adapt itself to getting used to “the New Normal”. Under “the New Normal” the Chinese economy will grow at lower rates of about 6 to 7 % annually, whereas China would strive for substantial quality advancement that should become a core element in its future growth model in the long run. To realize a more quality- and domestic market-oriented sustainable economic development, several reform measures need to be implemented and expanded and new reform policies need to be initiated. Focusing on three key growth challenges faced by China – domestic consumption, innovation and entrepreneurship, and foreign trade and investment – in their Kiel Policy Brief 101 the Kiel economists Wan-Hsin Liu and Rolf J. Langhammer provide more insights into these challenges and sketch potential policy measures that are required to deal with them. They conclude that reforms and policy measures to be implemented need to have a clear long-term orientation to support adequate long-term structural changes. Such orientation requires consistency, credibility, and transparency in order to avoid confusing signals to market participants. more ...


Requirements for a new Business Model in Greece

GrowthThe Kiel Institute’s economists Klaus Schrader, David Benček and Claus-Friedrich Laaser analyze Greece’s present business model and its deficiencies as well as the sustainability of the Greek debt burden in their contribution to the edited volume A New Growth Model for the Greek Economy by Panagiotis Petrakis. They conclude that the reform process is a necessary condition for structural change and economic recovery in Greece. Its completion and the promotion of private investment would accelerate the reconstruction of the Greek economy significantly. In addition, a strongly conditioned haircut or a phasing out of the Greek debt burden is inevitable to render Greece’s public debt sustainable and to end the still ongoing bail-out process.


European Stock Markets and the Brexit: The Uncertainty  Remains

BrexitIn his new Kiel Policy Brief 100 the Kiel Institute’s researcher Matthias Raddant reviews the response of the European stock markets to the Brexit referendum. He analyzes the correlation of market indices, stock volatility and the special role of stocks from the financial sector. The impact of the vote was very similar for the stock markets in France, Germany and Spain: The stock prices declined sharply and returned close to their previous levels within three weeks. Whereas in Italy volatility among financial stocks intensified permanently although the Italian market is the one least connected to the UK. But  spikes of volatility of financial stocks in Italy long before the Brexit vote indicate that uncertainly was present in the market before. In the UK itself the prices of stocks from the financial sector have also only recovered partly due the remaining uncertainty about necessary changes in the future EU financial infrastructure and the market access of UK-based financial institutions to the EU. more …


A New African Growth Story?

WachstumSince the early 2000s, Africa has been one of the fastest-growing regions in the world. In their Kiel Policy Brief 99 the IfW researchers Rainer Thiele and Manfred Wiebelt show that Africa’s boom was not only driven by high commodity prices, but was also associated with significant structural change towards productive activities outside the primary sector. Africa therefore provides many opportunities for international and German firms, but the conditions for an engagement in the continent remain challenging: Uncertainties in respect of the regulatory framework, reform deficits, a lack of trained workers and an inadequate infrastructure will render it difficult for Africa to live up to its economic potential. Against this background, the authors suggest that German development cooperation should focus its support on creating development-friendly public institutions, augmenting workers‘ qualifications and improving infrastructure. more …