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The crises of recent years have produced important innovations in European monetary and fiscal policy. The ECB has greatly expanded its purchases of government bonds and the EU is financing budgetary spending for the first time through the issuance of EU bonds. In addition, progress is being made in the harmonisation of corporate taxation.
Our research at ZEW helps to assess whether these European innovations have been successful and points out possible undesirable side effects. With its thematic focus on “European Monetary and Fiscal Policy”, the ZEW Monthly January 2023 provides an insight into our recent work on this topic. |
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RESEARCH ON EUROPEAN MONETARY AND FISCAL POLICY
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GERMANY SHOULD REFRAIN FROM UNILATERALLY INTRODUCING A GLOBAL MINIMUM TAX
| The global corporate minimum tax is on the way. In mid-2021, 137 countries agreed on the introduction of a worldwide minimum tax for multinational corporations. However, the minimum tax will only work if it is introduced on a global scale and if tax base calculation methods are harmonised internationally. A recent ZEW policy brief strongly advises against a German solo effort. This would neither curb tax competition nor generate meaningful additional tax revenues, but would create high costs for administration and compliance and harm Germany’s attractiveness for corporate investment.
↗ More about the ZEW study
| GROWTH OF PUBLIC ENTERPRISES LIMITS TRANSPARANCY
| The core budgets of the federal government, the federal states, the municipalities and social security system provide less and less of a comprehensive picture of government activities. Over the last ten years, the number and economic relevance of state-owned enterprises (SOEs), whose figures are not included in the core budgets, have increased significantly. This is confirmed by a study conducted by ZEW Mannheim with the support of the Strube Stiftung.
↗ More about the ZEW study
| CLIMATE POLICY DOMINANT THEME IN ECB SPEECHES ALONGSIDE PRICE STABILITY
| In public speeches, Christine Lagarde and the other members of the ECB's Governing Council more frequently address additional goals beyond the main monetary policy objective of price stability. In a recent study, ZEW researchers Friedrich Heinemann and Jan Kemper, with support from the Strube Stiftung, analysed this change in the ECB’s communication since the introduction of the euro. For this study, over 3,800 speeches were compared with the help of AI-based text analysis methods.
↗ More about the ZEW study |
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AT A GLANCE
| ↗ GERMANY AS A BUSINESS LOCATION LOSES OUT IN COUNTRY COMPARISON
| | Germany’s attractiveness as a location for family businesses cannot compete with the top locations in North America, Western Europe and Scandinavia. Germany is rated unfavourably, particularly in the areas of regulation, tax burden and energy. The gap to the top locations is also widening with regard to infrastructure. In contrast, the financial stability offered in Germany is rated comparatively positively. This is shown by the new Country Index for Family Businesses, which ZEW Mannheim has calculated for the ninth time on behalf of the Foundation of Family Businesses. |
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CURRENT ZEW RESEARCH
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| ↗ ICT SECTOR LEADS THE WAY IN INNOVATION AND START-UPS
The study “IKT-Branchenbild” (“ICT Sector Profile”), compiled annually on behalf of the German Ministry for Economic Affairs and Climate Action, concludes that the information and communications technology (ICT) sector, with its innovative products and services, is an important driver of digitalisation across all industries of the German economy. In addition, the ICT sector makes an above-average contribution to overall economic growth. “This makes it a key factor in maintaining and further enhancing Germany’s future viability as a business location. The sector proved this especially during the COVID-19 pandemic,” explains study author Dr. Thomas Niebel, researcher in ZEW’s “Digital Economy” Unit.
↗ GERMAN HOUSEHOLDS ARE TOO OPTIMISTIC ABOUT ENERGY COSTS AND TOO PESSIMISTIC ABOUT GOVERNMENT AID
German households underestimate the increased costs for electricity and gas and may therefore not sufficiently limit their energy consumption. This is suggested by a study for which ZEW and the University of Münster surveyed around 400 customers of a price comparison website in November 2022. The survey results show that in a scenario where households would have had to sign a new electricity contract in December, they expect on average an increase in expenditure of about 47.5 per cent relative to their current expenditure. Against the background of wholesale prices in November 2022, this seems very optimistic.
↗ ZEW SCHOOL TEAM ONCE AGAIN AMONG THE BEST CONTENDERS
On 2 December 2022, Ministerial Director Dr. Stefan Profit of the Federal Ministry for Economic Affairs and Climate Action honoured the winning teams of the YES! high school competition in Berlin. ZEW researcher Bastian Krieger from the “Economics of Innovation and Industrial Dynamics” Unit mentored the successful team from St. Raphael Gymnasium in Heidelberg, which won the Best Scientific Analysis Award. This award is given to the team whose evidence-based solution stands out for the high quality of its scientific research. Congratulations! |
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↗ LÜTZERATH REVEALS THE DILEMMA OF GERMAN CLIMATE POLICY
| | To prevent coal mining, climate activists had occupied the German village of Lützerath. Scientists for Future demanded a moratorium on coal mining in an open letter, saying that Lützerath had become a symbol: it’s about “sending a clear signal for the necessary departure from the fossil age”. But the question of “whether” a turn away from the fossil age is necessary has long been answered – instead it is a question of “how”. And this is where Lützerath reveals the dilemma of German climate policy. |
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EVENTS
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↗ SECOND ANNUAL MIFE CONFERENCE SHEDS LIGHT ON
FINANCIAL LITERACY IN TIMES OF CRISIS
| The second MIFE annual conference focused on financial education in the current crisis and reflected on the existing challenges. The conference of the Mannheim Institute for Financial Education (MIFE), a joint initiative of the University of Mannheim and ZEW Mannheim was followed by a two-day early career workshop. More than 90 international participants discussed recent scientific contributions on financial literacy, financial education and implications for policy and practical application, especially in the context of the current crisis. Five distinguished keynote speakers were invited to share their views on the topic.
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| UPCOMING
↗ MACCI ANNUAL CONFERENCE 2023
| | The Mannheim Centre for Competition and Innovation (MaCCI), a joint initiative between ZEW Mannheim and the University of Mannheim, is pleased to announce its 2023 Annual Conference on 23 and 24 March 2023 in Mannheim. The aim of the conference is to provide a platform for exchange and discussion on topics in competition- and innovation-related research between academic researchers and practitioners in public authorities, legal counsel, and economic consultancies. |
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→ CONTACT FOR QUESTIONS OR SUGGESTIONS ON THE CONTENT
| | Dr. Frank Herkenhoff | frank.herkenhoff@zew.de |
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