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22.04.2018
 
Kieler Beiträge zur Wirtschaftspolitik

 

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New Subsidy Report: A Never-Ending Flow of German Subsidies

PaketIn the new Kiel Institute subsidy report the authors Claus-Friedrich Laaser and Astrid Rosenschon document the federal grants as well as the total tax benefits until the year 2017. According to the federal budget, all federal financial grants increased again in 2017, by 10.8 percent to 55.3 billion euros. This is 20.8 billion euros more than before the financial crisis in 2007. In 2017, the tax concessions totaled 62.1 billion euros. The subsidy report for the first time includes a categorization of the important financial aids of the federal government and of the largest tax concessions with regard to their gradual harmfulness, carried out according to a "red-yellow-green" traffic light scheme. more …
 


Demand for a New German Climate Policy

Time for ChangeGermany has to induce and develop action in climate policy soon in order to reach future emission goals, demonstrate its will to act and regain some of its credibility in terms of climate action according to the IfW researchers Malte Winkler and Ruth Delzeit in their new Kiel Policy Brief No. 113. On the European level, the German government should engage for a sectoral expansion of the European Emission Trading System as well as for  the introduction of threshold values for freight transport on roads. The authors propose various policy actions to be taken especially at the sectoral level. more …
 


Italy’s Labor Market still in Crisis Mode

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In their Kiel Policy Brief 107 the authors Klaus Schrader and Marta Ulivelli analyse the shortcomings of the Italian economy with a focus on Italian labour market developments. They address the widespread fear that Italy could turn into a second Greece and could trigger some kind of domino effect. Although the analysis of the Italian economy shows that Italy is performing better than Greece, it becomes evident that Italy is losing ground towards the majority of the EU countries. The Italian labour market mirrors the lingering crisis: Mass unemployment, missing  perspectives for the young people, a low labour force participation and a dwindling competitiveness. The authors endorse the labour market reforms which had been initiated in the aftermath of the economic and finical crisis: enhancing labour mobility, increasing incentives to work, improving the labour market integration of unemployed, youths and women as well as  reorganizing the Italian labour administration. But the authors also emphasize that the reform process still needs to be completed to achieve the desired turnaround of the labour market and the economy as a whole. However, a delay of labour market and further structural reforms would hamper structural change and thereby diminish the prospects for economic growth that is required for the sustainability of Italy’s enormous debt burden. more …


India’s Foreign Trade with Ample Potential

IndienThe IfW economists Claus-Friedrich Laaser and Astrid Rosenschon analyze in how far the fast growing Indian economy has unexploited options to integrate itself into the international division of labor, to what extent India is actually integrated into the world economy, and what are the country’s regional and sectoral trade patterns. In their paper, now published as Kieler Beiträge zur Wirtschaftspolitik No. 13, they conclude that India’s overall integration into the international division of labor is still far from being completed and leaves ample room for improvement. By now, India is trading intensely with some specific partners, the USA and particularly the Arabian countries, and with crude oil, oil products, and intermediate and finalized products of the jewelry industry. However, European partners are only of minor importance. more …


Public Budget Surpluses and Coalition Talks in Germany

ReichstagThe Kiel Institute’s budget expert Jens Boysen-Hogrefe addresses the public budget surpluses in Germany against the backdrop of the coalition talks between CDU/CSU and SPD in his Kiel Policy Brief 112. He emphasizes that the current public budget surpluses are due to the economic boom and low interest rates. With a view to the upcoming fiscal burdens in the course of demographic change he advises against devoting surpluses one-to-one for tax cuts or additional spending. He also warns against an additional fiscal stimulus during the current boom. more … 


How to Improve Germany’s Technological Competitiveness?

businessIn their Kiel Policy Brief 111 the Kiel Institute’s researchers Dirk Dohse and Julian Vehrke analyze whether the German initiative “InterSpiN” is an appropriate policy tool to enhance Germany’s technological competitiveness by fostering a stronger connection of high-technology regions with international partner regions. They conclude that InterSpiN is, in principal, suitable to foster the internationalization of German high-tech clusters. However, the long-run success and sustainability of the internationalization strategies critically depends on the local actors and is, thus, likely to vary substantially across regions. more …


Federalism as the Better Choice for Catalonia

katalonienAgainst the backdrop of the conflict over Catalonia the IfW economists Klaus Schrader and Claus-Friedrich Laaser advocate a reform of the federal structures of Spain following the principles of fiscal federalism. In their contribution to the new issue of the ifo Schnelldienst they argue that separatism will endanger the political and economic integration process of the last decades from which Spain and, in particular, Catalonia substantially benefitted. The authors propose negotiations between the Spanish regions and the central government to achieve a balance of interests with respect to a reallocation of federal competences in line with the Spanish constitution. more … 


German Unemployment Insurance : Budget Surplus vs Reasonable Contributions

EuroscheineIn his Kiel Policy Brief 110 the Kiel economist Alfred Boss criticizes the budget surplus which the German system of unemployment insurance is generating since 2011. He shows that only a small part of the surplus is due to the cyclical stance of the German economy. The surplus mainly is a structural one. Against this backdrop, the author concludes that the rate of contribution to unemployment insurance should be reduced from 3 to 2.5 percent beginning in 2018. This would reverse the increase of the overall rate of contributions to social security in 2017. As a consequence, the increase of employment would be fostered. more … 

 


Germany’s Build-up of Wind Energy At Stake?

WindparkThe tendering system in accordance with the German EEG 2017 distinguishes between civil energy companies and commercial providers for onshore wind energy. However, the IfW researcher Hilke Wilts and Ruth Delzeit show that primarily big project developers profit from the less stringent regulation for civil energy companies. The considerable bid price decrease through the past bidding rounds makes it practically impossible to run wind farms profitably. Penalty payments for nonrealization of projects can counteract this trend and ensure the planned build-up of wind energy. more …
 


Explaining German Productivity

ProduktivitätThe  trend  decline  of  productivity  growth  in  Germany  is  not  due  to  a  single  cause  but  is  the  result  of the interplay of multiple factors with time-varying relative importance. Notwithstanding severe measurement issues, the evidence is real and not a statistical artefact. This is the result of a report on the development of German productivity, commissioned by the Federal Ministry of Finance and the Federal Ministry of Economy, which has now been published in the series „Kieler Beiträge zur Wirtschaftspolitik“. However, the authors Martin Ademmer, Frank Bickenbach, Eckhardt Bode, Jens Boysen-Hogrefe, Salomon Fiedler, Klaus-Jürgen Gern, Holger Görg, Dominik Groll, Cecilia Hornok, Nils Jannsen, Stefan Kooths and Christiane Krieger-Boden do not expect that productivity growth in Germany remains depressed in the longer term. more …

 

Limitations of Policy in Case of the German Current Account Surplus

BundesregierungThe persistently high German current account surpluses are subject to increasing international criticism based on the presumption that they are negative for both domestic and foreign economies. Against this backdrop, the Kiel Institute’s economists Jens Boysen-Hogrefe, Klaus-Jürgen Gern, Dominik Groll, Philipp Hauber, Nils Jannsen and Stefan Kooths has studied the effect of eight economic policy measures on the current account balance using the global macroeconometric model NiGEM. They conclude that German policy-makers lack adequate policy measures to reduce the current account surplus. Their report which was commissioned by the Federal Ministry of Finance has now been published in the series „Kieler Beiträge zur Wirtschaftspolitik“. more …


Spain and Catalonia: better together


katalonienThe political conflict over the legal status of Catalonia fuels concerns about the future economic development in Spain which returned on a path of economic recovery in the aftermath of the financial and economic crisis. In their Kiel Policy Brief 108 the IfW economists Klaus Schrader and Claus-Friedrich Laaser explain that together with other economically strong Spanish regions Catalonia contributed to the recovery of the Spanish economy. The analysis also reveals, however, that Catalonia is not dominating Spain’s economic structures, and like other Spanish regions Catalonia is still facing severe economic problems, especially on the labor market. Moreover, its export-intensive, highly industrialized economy benefits from the close business ties with other Spanish regions and from the unrestricted access to the EU Internal Market which would be at stake in case of an unilateral declaration of independency. To achieve a balance of interests between the Spanish regions and the central government by a joint effort it is proposed to reform Spain’s federal structures on the basis of principles derived from fiscal federalism. more …


Baltic Sea Trade in times of Globalization

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Against the backdrop of the 100th anniversary of the Republic of Finland the Kiel Institute's economists Claus-Friedrich Laaser and Klaus Schrader analyze the trade relations in the Baltic Sea Region in their contribution for the edited volume "The economic state of the Baltic Sea region" by Kari Liuhto (Centrum Balticum, Turku). The authors especially discuss two recent challenges to the Baltic Sea Region's trade: the impaired trade relations with Russia in the aftermath of the Ukraine crisis since 2014, and the looming Brexit and its consequences for EU trade. From their analyses of regional and sectoral trade patterns they conclude that the Baltic Sea neighbors’ trade does not focus on the tiny Baltic Sea Region but on large and wealthy markets even in far distant regions. In  the era of globalization the Baltic Sea serves as a bridge between regions, it does not appear as an internal market of its own. In this way the Baltic Rim countries are following a tradition of the medieval trade association of the "Hanse" which also linked far distant trade regions with each other. Therefore, these countries should be advocates of free trade in times of re-emerging  protectionism, disintegration and economic sanctions. more ...


Hospital remuneration across federal states: Considering costs or distorting competition?

geld_spritzeThe report Kieler Beiträge zur Wirtschaftspolitik No. 10 analyzes whether differences in the base rates between federal states in Germany can be attributed to systematic cost differences. Results of the statistical analysis suggest that only hospital-specific and structural characteristics of regions account for a portion of the variance in base rates. The current cost structure of hospitals is not reflected by the state-level differentiation of base rates which for the most part seems to be arbitrary. According to economic theory of regulation and incentives, political decision makers should continue to pursue a convergence of base rates towards a national rate. more …


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 …