The presently tenuous situation in Turkey will worsen if the government does not take appropriate policy action. In view of foreign investors’ loss of confidence, the cost of external financing is likely to rise while consumption and investment will fall, and the Turkish lira would depreciate ... more

On September 12, 2018, the president of the Technical University of Berlin appointed Tomaso Duso professor of empirical industrial economics at the Faculty of Economics and Management. The appointment was made jointly with DIW Berlin and involves heading the Firms and Markets Department at DIW ... more

Earnings differences are a recurring topic of public discussion in Germany. Data from the long-term Socio-Economic Panel (SOEP) study as well as a separate survey of German employees (LINOS) show that earnings inequalities are generally perceived as fair while a substantial share of the respondents ... more

According to DIW Berlin estimations, the German economy will continue on its current growth path over the next three years. This confirms the forecast from early summer that economic output will grow at a more moderate pace than previously. DIW Berlin’s forecast indicates growth of 1.8 percent ... more

Policy makers have long favored command-and-control (CAC) methods to tackle environmental damage. The number of CAC policies devoted to environmental protection has increased steadily since the 1950s and have been a large part of the overall portfolio of environmental laws and regulation in the ... more

• Current DIW Weekly Report 38-39/2018
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The presently tenuous situation in Turkey will worsen if the government does not take appropriate policy action. In view of foreign investors’ loss of confidence, the cost of external financing is likely to rise while consumption and investment will fall, and the Turkish lira would depreciate further. The influx of foreign capital would dry up as well. Conservative estimates show that the country’s growth would decline by five percent in the first year. These are the results of simulations with an equilibrium model developed by the German Institute for Economic Research. However, adopting measures such as budget consolidation, interest rate hikes, or lowering the target inflation rate could prevent a crisis. The most effective and efficient measure is lowering the perceived inflation target by restoring central bank’s independence, thereby regaining investor confidence. Loans from international partners would also stabilize Turkey’s currency, inflation, and economy – and support the country’s reform process.

Earnings differences are a recurring topic of public discussion in Germany. Data from the long-term Socio-Economic Panel (SOEP) study as well as a separate survey of German employees (LINOS) show that earnings inequalities are generally perceived as fair while a substantial share of the respondents find the current earnings distribution in Germany unfair. This applies above all to the middle and lower end of the earnings distribution, where respondents perceive there to be particularly severe underpayment. More rarely do respondents find that employees earning high salaries are unfairly overpaid. Perceived unfairness in the upper strata of the earnings distribution is associated with a reduction in effort at the workplace while perceived unfairness in the lower end of the earnings distribution is accompanied by a lack of participation in the democratic process.