Press Releases of DIW Berlin Press Releases en DIW Berlin Short-term benefits for Germany and the euro area from a U.S. interest rate hike German Institute for Economic Research: No reason for exaggerated concern about an economic slowdown

Euro area states can benefit from an interest rate increase in the U.S. in the short term, according to the findings of a current study by the German Institute for Economic Research (DIW Berlin). Thanks to the devaluation of the euro, their exports would rise to the extent that they are able to overcompensate for the negative demand effect from the U.S. This holds true for Germany in particular. In the medium term, interest rates in the euro area would follow those of the U.S., leading to a decline in growth rates there as well. “The positive effect would only be temporary. But our findings should reduce concerns that a hike in the U.S. benchmark interest rate would result in spillover effects and weaken the euro area economically,” said DIW economist Max Hanisch.

Wed, 21 Mar 2018 04:03:00 +0200
AfD received more votes in the parliamentary election in rural areas with aging populations DIW Berlin study analyzes the correlation between the AfD's vote performance and different economic and sociodemographic variables at an electoral district level – The AfD performed well in western German electoral districts where there are many employees in the manufacturing industry and where incomes are low – In the eastern districts they performed better where there is a large share of elderly residents and a high density of craft businesses

DIW Berlin president Marcel Fratzscher and co-authors Christian Franz and Alexander Kritikos analyzed the correlation between the Alternative for Germany’s (Alternative für Deutschland, AfD) performance in the last parliamentary election and seven economic and sociodemografic structural variables. Certain characteristics, such as the unemployment rate or share of non-German citizens in each electoral district, appear to barely play a role. There are positive correlations for other factors, meaning that these characteristics are especially pronounced in electoral districts where the AfD performed well. The patterns are different in the eastern and western parts of Germany.

Wed, 21 Feb 2018 10:00:00 +0200
Household electricity prices: major savings possible by switching tariffs Retail electricity prices develop very differently depending on the provider and the tariff – Basic tariffs from default providers increased significantly between 2007 and 2014 while the most affordable tariffs offered in the market remained mostly constant – Providers passed the cost savings from falling wholesale prices on to households to varying degrees

The average electricity prices for German households have been rising almost constantly since 2007, but the rise in retail prices has affected customers to different degrees. While the basic tariffs offered by default providers—the most expensive tariffs available—increased by 50 percent by 2014, the most affordable tariffs on the market generally remained unchanged. The default providers are legally required to sell energy in the form of a default tariff to all households in their respective service areas. If consumers would switch from a default tariff to a cheaper tariff from a different provider, they would save a lot of money. In 2014, assuming average power consumption (2,800 kilowatt hours per year), it would have been possible to save an average of almost 400 euros. Nevertheless, only a relatively small number of households switch providers.

Wed, 07 Feb 2018 09:48:00 +0200
Company productivity increases with more knowledge-based capital First study using official company records — more knowledge-based capital increases productivity — some sectors are already investing more in knowledge-based capital than in machines and buildings — economic policy must take a holistic approach towards investments

Every year in Germany, around 200 billion euros are invested in knowledge-based capital, such as research and development (R&D), software and databases, marketing and advertising, or technical design. These investments do not only increase company productivity, however. They also make investments in traditional capital goods, such as machinery or buildings, more effective. This is the conclusion reached by the German Institute for Economic Research (DIW Berlin) on the basis of a dataset containing almost two million official company records. “We found that, regardless of whether investments are made in R&D, organizational capital, or software, the positive effects on productivity are quite similar,” said Alexander Schiersch, who led the project.

Thu, 01 Feb 2018 03:00:00 +0200
DIW Berlin Economic Barometer January 2018: the German economy is soaring The German economy continues to soar: the German Institute for Economic Research’s (DIW Berlin) Economic Barometer is at its highest reading in seven years. The index score for the first quarter landed at 118 points, an increase of almost four points compared to the last quarter of 2017. The Economic Barometer is thus well-above the 100-point mark that corresponds to the long-term average growth of 0.3 percent. Accordingly, the German economy is likely to grow more vigorously in the winter—by an estimated 0.7 percent in the first quarter of 2018 after a 0.6 percent growth in the fourth quarter of 2017, in each case compared to the previous quarter.

Wed, 31 Jan 2018 12:02:00 +0200
The new grand coalition’s work program: DIW Berlin says there is still much to improve In important areas such as tax policy, education, and energy, the future grand coalition must be considerably more ambitious – The need for reform in Germany is not being addressed sufficiently

Germany’s next government will most likely once again be a grand coalition. However, the results of the preliminary coalition talks between the Union parties and the SPD, which serve as a basis for the current negotiations, do not sufficiently address Germany’s need for reform, as many scientists at the German Institute for Economic Research (DIW Berlin) have concluded. “Good approaches came from the talks, but as far as Europe, tax policy, education, investments, and other areas are concerned, vision and ambition are lacking,” said DIW President Marcel Fratzscher. “The actual coalition talks should do more than just endorse the agreement that has been reached; they should be used to improve many aspects of it as well. The German economy may be doing well, but the country is in urgent need of reforms. Now is the time to initiate these reforms before another four years are lost.”

Wed, 31 Jan 2018 09:56:00 +0200
DIW Women Executives Barometer 2018: the gender quota for supervisory boards is effective, development on executive boards has almost reached a standstill DIW Berlin has analyzed the development of the proportion of women in over 500 businesses – There is no indication that the gender quota is affecting executive boards – Banks and insurance companies in particular need to catch up – Politicians and companies must work together

The 30 percent gender quota for supervisory boards is effective: the proportion of women on the supervisory boards of a good 100 companies in Germany which have been subject to the quota since 2016 increased to an average of 30 percent by the end of 2017, almost three percentage points more than the previous year. The German Institute for Economic Research's (DIW Berlin) Women Executives Barometer shows for the first time that numerous companies are increasing the proportion of female members serving on their supervisory board beyond the specified minimum.

Thu, 18 Jan 2018 11:06:00 +0200
Franco-German proposal for a reform of the European monetary union: building a euro area with more risk-sharing and more discipline Joint press release of the German Institute for Economic Research (DIW Berlin) and ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Fourteen economists from France and Germany, including Marcel Fratzscher (DIW Berlin) and Clemens Fuest (ifo), are presenting a reform package aimed at making the euro area more robust and more resilient to crises as well as allow for sound public finances and stronger economic growth.

After nearly a decade of stagnation, the euro area is finally experiencing a robust economic recovery. At the same time, it remains financially vulnerable, economically and politically divided, and seemingly unable to deliver its full growth potential. A reform of the financial, fiscal, and institutional architecture of the monetary union is urgently called for.

Wed, 17 Jan 2018 09:30:00 +0200
Gross income gap has increased since reunification The top 10% of income earners in Germany earn almost as much as the middle 40% – the top 1%’s share of national income has increased from eight to 13 percent since 1995.

The share of national income belonging to the top 1% of income earners has grown significantly in Germany since the mid-1990s, while the share earned by the bottom 50% has significantly decreased. These are the main findings of a study by DIW Berlin economist Charlotte Bartels based on income tax data for Germany for the World Inequality Report.

Tue, 16 Jan 2018 10:00:00 +0200
Construction volume forecast: End of the new housing sector boom Construction industry continues very positive development – more room for modernization and renovation of existing buildings – construction prices rise sharply

The construction sector cycle will continue its upward course in the next two years according to the forecast of the German Institute for Economic Research (DIW Berlin), which makes its annual prognosis of construction volume on behalf of the Federal Ministry for the Environment (Bundesbauministerium, BMUB) and the Federal Institute for Research on Building, Urban Affairs and Spatial Development (Bundesinstitut für Bau-, Stadt- und Raumforschung, BBSR). However, investment will concentrate more on renovation and modernization, swinging away from new construction. Commercial and public-sector construction activity is expected to continue its moderate pace of increase.

Fri, 12 Jan 2018 12:00:00 +0200
Gert G. Wagner celebrates his 65th birthday, leaves position on DIW Berlin's executive board Gert G. Wagner, who served as a member of the German Institute for Economic Research's executive board from 2011 to 2017, will celebrate his 65th birthday on January 5. The economist and social scientist was the head of the Socio-Economic Panel (SOEP) research infrastructure at DIW Berlin from 1989 to 2011 and developed it into the largest and longest-running long-term study on social and economic conditions in Germany. Wagner is leaving his position as a member of DIW Berlin's executive board in January but will remain at the institute as a Visiting Senior Research Fellow. He will shift the focus of his future research activities to the Max Planck Institute for Human Development (Max-Planck-Institut für Bildungsforschung), where he has been a Max Planck Fellow since 2008.

Thu, 04 Jan 2018 09:30:00 +0200
DIW Berlin Economic Barometer December 2017: the boom continues despite an end-of-the-year damper The Economic Barometer of the German Institute for Economic Research (DIW Berlin) dropped by four points in December to 109 points. However, the value above 100 still indicates above-average GDP growth in the fourth quarter by slightly more than half a percent when compared to the third quarter. "Economic growth in the final quarter will be somewhat weaker than before. Nonetheless, the bulging order books indicate that the strong upswing will continue," says Ferdinand Fichtner, DIW Berlin's chief economic forecaster.

Thu, 21 Dec 2017 10:25:00 +0200
New studies from DIW Berlin emphasize the importance of day care facilities quality for children's development Children from families who do not speak German as their main language at home often attend childcare facilities with children in similar situations – Policies providing financial incentives for facilities with a minimum percentage of children from migrant backgrounds shouldn’t be encouraged – Separate study shows that quality is strongly influenced by children's social behavior – The effect is strongest for children from socioeconomically disadvantaged families

More and more children in Germany are attending day care centers. In 2016, almost 33 percent of children under the age of three and around 94 percent of all children aged three to six were attending a day care center. The quality of a center and composition of groups there play an important role in children's behavioral and linguistic development. However, a new study from the German Institute for Economic Research (DIW Berlin) shows that children whose home language isn't German often attend a day care center with peers who also do not speak German with their families at home.

Wed, 20 Dec 2017 12:23:00 +0200
The potential for green public procurement is still largely unexploited in Germany Public purchases can make a valuable contribution to decarbonizing the economy – Despite an upward trend, only 2.4 percent of public contracts in Germany include green criteria – Policy action is needed in order to fully exploit the potential

Green public procurement, by which public authorities choose their suppliers of goods and services not only based on price but also according to environmentally friendly criteria, is still very much underused in Germany, a study by the German Institute for Economic Research (DIW Berlin) shows. Though the practice has been on the rise these past years, its use remains marginal: an analysis of public contract data shows that in 2015, only 2.4 percent of all public contracts awarded in Germany used green criteria.

Tue, 12 Dec 2017 09:43:00 +0200
In Germany, approximately 1.8 million workers eligible for the minimum wage are earning less The introduction of the minimum wage in Germany led to significant increases in wages –– However, around seven percent of eligible workers earn less than minimum wage, with the marginally employed and employees at small businesses being particularly affected –– When one also takes into account workers who are not eligible for a minimum wage, such as freelancers, a total of around 4.4 million people in Germany earned less than 8.50 euros gross per hour in 2016 –– Inspection and sanctions mechanisms need to be improved as do methods for recording work hours

A new study from the German Institute for Economic Research (DIW Berlin) and the University of Potsdam shows that while the introduction of a minimum wage has led to a significant increase in low wages, not every worker who has the right to a minimum wage is being compensated accordingly.

Wed, 06 Dec 2017 11:00:00 +0200
Expansive monetary policy: Early exit from bond purchase program could reduce GDP growth and inflation in the euro area The following study from DIW Berlin examines the effects of different exit scenarios from the European Central bank’s bond purchase program on the European economy – exiting early would especially depress the inflation rate

What if the ECB were to reduce its bond purchase program by more than what it reported at the end of October? What if it reduced its bond holdings quicker or earlier? DIW Berlin economists Marius Clemens, Stefan Gebauer, and Malte Rieth investigated what implications there would be for economic growth and inflation in the euro area.

Wed, 06 Dec 2017 09:45:00 +0200
Stefan Liebig, new board member at the German Institute for Economic Research as of 2018 On January 1, 2018, Liebig will become director of the Socio-Economic Panel (SOEP) and a member of the institute’s Executive Board

Stefan Liebig, a professor of sociology at Bielefeld University, will succeed Gert G. Wagner as a member of the German Institute for Economic Research’s Executive Board on January 1, 2018. Having reached retirement age, Wagner (64) is relinquishing his position. Fellow Executive Board members Marcel Fratzscher and Angelica E. Röhr will continue as president and managing director, respectively. At the beginning of 2018, Liebig will also take over as director of the Socio-Economic Panel (SOEP) research infrastructure at DIW Berlin. Jürgen Schupp, the current director, will remain at SOEP as its deputy director and Gert G. Wagner will join as “Visiting Senior Research Fellow.”

Fri, 01 Dec 2017 09:55:00 +0200
Higher employment rates and more money in the pension fund Two DIW studies on the partial retirement scheme and raising the normal retirement age: simulations show positive employment effects and fiscal implications

A normal retirement age that increases relative to the rise in life expectancy after 2030 could help keep the funding of the statutory pension insurance scheme stable without the pension level decreasing further. Depending on the scenario, a partial retirement scheme could also relieve retirement funds and raise employment rates. These are the most important results from two DIW studies on the topic of retirement.

Wed, 29 Nov 2017 02:19:00 +0200
DIW Economic Barometer November 2017: euphoric expectations signal a strong end to the year The economic barometer of the German Institute for Economic Research (DIW Berlin) once again reports exceptionally strong growth in the final quarter of 2017: the index level increased to 113 points. GDP should thus continue to outperform at a read of 0.8 percent in the fourth quarter. “Caution should be exercised when interpreting the euphoric sentiment indicators,” warns Ferdinand Fichtner, head of forecasting at DIW Berlin. “After the election, many companies should have expected noticeable economic stimuli – and whether this still applies after the failure of the Jamaica coalition talks remains to be seen.” Indicators reflecting the current situation have subsided; industrial production has also declined recently.

Wed, 29 Nov 2017 10:29:00 +0200
German companies strengthen research and development – both domestically and abroad The R&D expenditure of German companies abroad has more than doubled compared to 2003. At the same time, their domestic investments are increasing sharply – The majority of the investments can be attributed to the automotive engineering and pharmaceutical industries – The share of foreign companies in R&D investments in Germany is sinking.

In recent years, German companies have invested more in research and development (R&D) abroad. Between 2003 and 2015, the annual volume of investments abroad more than doubled from 10.9 to 24 billion euros. Thus, the foreign share of German companies’ total R&D investments amounted to 35 percent. However, domestic expenditure for research and development rose by 76 percent to almost 45 billion euros. In total, locations in Germany accounted for 60 percent of the additional R&D investments, while locations abroad accounted for the other 40 percent.

Wed, 22 Nov 2017 10:00:00 +0200