DIW Roundup

Politik im Fokus

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The Controversy over the Free-Trade Agreement TTIP
22 October 2014, Philipp M. Richter
Roundup 42

A short name is causing a lasting debate: TTIP [tiːtɪp]. Ever since the beginning of the negotiations in the summer of 2013, media coverage of the planned Transatlantic Trade and Investment Partnership between the EU and the US has contributed to a critical debate on the topic. In doing so, difficulties have arisen in differentiating factually substantiated arguments from one-sided statements. TTIP is a planned agreement on free trade and investment between the US and the EU, whose details are currently under negotiation. Advocates expect a stimulus on economic growth, new jobs and a (...)

Skills Training for Entrepreneurs in Developing Countries
18 September 2014,
Roundup 37

For most of the developing world, microenterprises are a key source of income and employment creation. For many countries the informal sector, where most of the small enterprises exist, represents over 80% of employment (ILO 2012). These businesses often have a difficult time growing. There are a number of reasons that have been put forward by policy makers and researchers for this lack of growth, including missing the necessary skills to manage a growing business. International NGOs and governments are interested in training programs. The ILO and World Bank have invested heavily in (...)

The Role of Financial Literacy and of Financial Education Interventions in Developing Countries
9 September 2014, Margherita Calderone
Roundup 34

Financial literacy has received increased attention since the global financial crisis and the literature confirms that it is correlated with higher household well-being. In parallel, financial education programs have grown in popularity and an increasing number of countries are developing national financial education strategies and making more investments in related programs. However, the evidence from field experimental research linking financial education interventions and household financial outcomes in developing countries provides mixed results. New findings from recent experiments (...)

Unconditional basic income: an economic perspective
21 August 2014, Luke Haywood
Roundup 33

A wide range of public figures from the social sciences, politics and business have proposed paying every citizen a fixed amount of income without means testing or work requirement. The idea is fascinating. Most recently, a widely reported crowd-funding initiative from Berlin collected €12,000 to finance one year’s worth of unconditional basic income for a randomly selected individual.  

Internal Migration in Developing Countries
29 July 2014, Valeria Groppo
Roundup 31

For people in rural areas of developing countries, finding a better paying job or better education is often only possible by moving – migrating – somewhere else. Moreover, agricultural production, generally the main economic activity in rural areas of developing countries, is risky, affected by droughts and floods. Due to poverty and the limited availability of crop insurance, rural households often rely on distant family members to provide money for buying food, starting a business or maintaining an existing business. The vast majority of moves happen within countries. Focusing (...)

Are the Economic Sanctions against Russia Effective?
8 July 2014, Konstantin A. Kholodilin, Dirk Ulbricht
Roundup 28

The introduced sanctions against Russia, which at the moment are on a level of travel bans and asset freezes against a limited group of individuals and firms, are unlikely to trigger a profound change in Russian foreign policy. This can primarily be attributed to the fact that the economic impact of the sanctions is rather low. However, the current political tensions have had an impact on financial and non-financial indicators, including a possibly persistent effect on government bond yields.

Soldiers and Trauma
3 July 2014,
Roundup 26

Understanding the risks and consequences of military service in fragile regions is a vital concern facing veterans and policymakers in Germany (and many other nations). Researchers, health professionals, politicians and the news media are actively discussing this contentious topic. A key point in the debate is the psychological well-being of discharged servicemen. The purpose of this column is to offer a perspective on prevalent opinions and evidence regarding the question: What are the risks of deployment in a fragile region for the psychological health of military personnel?

Can the Market Stability Reserve stabilise the EU ETS: commentators hedge their bets
5 June 2014,
Roundup 23

In response to an imbalance between the demand and supply of permits within the European Union Emissions Trading System (EU ETS), the European Commission has proposed the introduction of a Market Stability Reserve (MSR). The MSR represents a quantity based automatic adjustment mechanism, which is designed to tackle the current surplus and introduce a degree of flexibility, allowing the system to respond to future demand side shocks. While some positive features of the MSR have been highlighted, the design, effectiveness and institutional setting have also come under criticism.

The New Growth Debate
13 May 2014, Guido Baldi
Roundup 18

The developed economies of Europe and the United States are slowly recovering from the worldwide financial crisis and the debt crisis in the euro area. How will the economic situation of these countries evolve in the future? Will the developed economies experience high rates of productivity and economic growth or will they have to face stagnation for a long period of time? Various famous economists have started a debate about these issues.

The Bank Capital Debate: Should Fragility Be Reduced?
29 April 2014, David Pothier, Philipp König
Roundup 17

The recent financial crisis has exposed the fragility of the banking sector to sudden withdrawals of wholesale funding, asset price declines and market dry-ups. Governments and central banks had to step in to prevent major banks from defaulting. These events led to renewed interest in the question whether the fragility of banks should be tolerated as a necessary, even desirable feature of an efficient process of financial intermediation, or whether banks should be subject to stricter regulation ex ante. This Round-Up summarizes the key arguments on both sides of the debate.

Structural Reforms in the Eurozone: Timing Matters
15 April 2014, David Pothier
Roundup 15

Several leading policymakers – from ECB President Mario Draghi to EC President José Manual Barroso – have pushed Eurozone countries to adopt far-reaching structural reforms in labour and product markets in order to foster growth and employment. While there is a broad consensus that structural reforms enhance countries’ growth potential in the long-run, recent research shows that they may have harmful effects in the short-run when not accompanied by substantial monetary stimulus. Consequently, a heated debate has started among economists and policymakers about whether (...)

Early Retirement at 63: Fair Compensation or Pension Giveaway?
1 April 2014,
Roundup 9

After Easter, Germany's new labor and social affairs minister Andrea Nahles will be presenting the grand coalition's first major reform proposal for parliamentary debate: a bill to improve the benefits provided under the statutory pension system. A centerpiece of the reform package is early retirement on a full pension at 63 for those who have been paying into the state pension system for a long period of time. In defense of the proposal, Nahles has launched an information campaign emphasizing that "It's not a giveaway; it's earned." Critics, however, call early retirement at 63 a costly (...)

A Minimum Wage for Germany – What Should We Expect?
4 February 2014, David Pothier
Roundup 7

A key component of the coalition agreement between the CDU/CSU and SPD signed on November 27 is the adoption of a minimum wage for Germany. Under the agreement, a statutory minimum wage of €8.50 per hour will be introduced across the country starting in 2017. Pushed as a make-or-break issue by the SPD during the negotiations, its introduction follows months of heated debate about its desirability and potential consequences. Although economists have yet to reach a consensus on the issue, the recent experience of the UK provides some valuable insights about what we should expect from the (...)

Debating the shortage of skilled workers
14 January 2014,
Roundup 4

It seems to be widely acknowledged that Germany will face a shortage of skilled workers within no more than a few years. However, the extent of the current and future skilled worker shortage is still up for debate among experts. The disagreement begins with the choice of adequate scarcity indicators and model assumptions in long-run projections.

The safe asset controversy: Policy implications after the crisis
7 January 2014, Christoph Große Steffen
Roundup 3

Safe assets are the lubricant of the financial system. They serve as a store of value, to meet regulatory requirements, and as a pricing benchmark. Some researchers identify a severe and chronic global safe asset shortage; others disagree, while empirical evidence remains ambiguous. In the post-Lehman world, the availability of safe assets entails new policy challenges. While still a potential source for global imbalances, the debate today stretches further to implications for financial stability and economic policy effectiveness.


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