Comment
Federal Government | Change of government | Jamaica | Coalition government | Energy transition
Exploratory talks to form Germany’s next government with a “Jamaica coalition” have collapsed.

Professor Achim Wambach, president of the Centre for European Economic Research (ZEW), Mannheim, shares his disappointment in the collapse of the coalition talks between the CDU, Greens and FDP (also known as a “Jamaica coalition” because the parties’ colours replicate the Jamaican flag), especially with regard to new design options for Germany’s energy transition.

Research
CO2 emission | international markets | Emissions trading | CO2 certificate | Climate policy
Though international trade in CO2 certificates has its advantages, the establishment of the necessary markets is making only slow progress.

The establishment of international markets for trading CO2 emission certificates is currently progressing at an extremely sluggish pace. This is the result, firstly, of countries that might participate in such markets having strong incentives to issue as many CO2 certificates as possible. Another reason is that governments can appoint individuals to ministerial positions – where they will be responsible for climate policy – who prioritise corporate profits over environmental protection as a means of signalling to other countries that they will have to shoulder more of the burden in terms of climate protection. The interplay of these two mechanisms results in countries pursuing less ambitious climate policies where the primary concern is palming off the majority of the responsibility for lowering CO2 emissions onto other countries. These are the findings of a study conducted by the Centre for European Economic Research (ZEW) in Mannheim.

ZEW Indicator of Economic Sentiment
ZEW Financial Market Survey | Business cycle research | Business survey | Germany | Short-term forecast | Cyclical indicator | Business Cycle | ZEW Indicator of Economic Sentiment
ZEW Indicator of Economic Sentiment for Germany, November 2017

The ZEW Indicator of Economic Sentiment for Germany in November 2017 has once again improved on the result from the previous month. The indicator currently stands at 18.7 points, which corresponds to an increase of 1.1 points compared with the October result. The indicator, however, still remains below the long-term average of 23.7 points. “The prospects for the German economy remain encouragingly positive. Overall high levels of growth across Europe in the third quarter are supporting further growth in Germany and boosting expectations for the coming six months. This favourable economic climate should be used to create a stronger and more robust basis for future growth,” comments ZEW President Professor Achim Wambach.

Comment
European Union | Reform actions | Europe | European policy | Reform | Eurozone | reform process

The next German government should not agree to any reform of the Eurozone that does not include the introduction of an insolvency system for Member States deep in government debt. To mark the founding conference of the „European Network for Economic and Fiscal Policy Research“ (EconPol Europe)), ZEW research department head Professor Friedrich Heinemann today in Brussels presented an outline of a potential Eurozone reform.

Comment
Tax revenue estimation | Germany | Tax Policy

The German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates has for the second time this year made an upward adjustment of its forecasts for federal, state and municipal tax revenues in Germany up until the year 2021. According to their estimates, government tax revenue is set to rise from 734.2 billion euros in 2017 to 889.6 billion euros in 2022, a greater increase than that previously predicted by the Working Party in May 2017. ZEW research department head Professor Friedrich Heinemann offers his view on the subject.

Dates and News
Research data | Knowledge management | Information management | ZEW | Open Science
Open Access involves making research publications freely available online.

The Centre for European Economic Research (ZEW), Mannheim, has taken a clear stance for greater transparency and openness with its new Open Access strategy. Open Access involves making research publications freely available online. With its new strategy, ZEW joins the national and international efforts, specifically the Leibniz Association’s Open Access Guidelines, aimed at making scientific knowledge available to all without any technical, legal or financial barriers.

Comment
Public bond | ECB | Monetary Policy | Interest rate policy | Eurozone | Monetary policy decisions
The ECB has cut back its bond purchase programme, but has no plans to end the programme in 2018.

As expected, the European Central Bank (ECB) has announced its decision to continue its asset purchase programme beyond the end of the year. Until December of this year the ECB will purchase bonds totalling 60 billion euros each month, dropping down to 30 billion euros a month from January 2018 until at least September 2018. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW) in Mannheim, offers his view on the subject.

Information Economy
Information Services | Germany | Sectoral business cycle | Sectoral development

Economic sentiment among companies in the German information economy sector has been largely positive in the third quarter of 2017, as suggested by the ZEW Sentiment Indicator for the Information Economy. The indicator takes into account the companies’ current business situation as well as their business expectations. In comparison to the previous quarter, the sentiment indicator has climbed 0.6 points to a current level of 68.3 points. This is the result of a survey conducted among firms in the German information economy by the Centre for European Economic Research (ZEW), Mannheim, in September 2017.

Research
Public bond | Eurozone | Budget deficit | Monetary Policy | Southern Europe | Europe | ECB
The ECB bond purchase programme benefits in particular Spain and Italy.

Southern European countries profit in a disproportionate way from the bond-buying programme of the European Central Bank (ECB), with the largest bias towards Spain and Italy. Within the framework of the Public Sector Purchase Programme (PSPP), national central banks and the ECB have purchased Spanish and Italian government bonds whose volume exceeds Spain’s and Italy’s share in gross domestic product (GPD) by around 43 billion euros and 51 billion euros, respectively. If the ECB continues its bond-buying programme in 2018, this would further extend the preferential treatment of euro countries with high debt levels. These are the findings of a current quantitative analysis by the Centre for European Economic Research (ZEW) in Mannheim.

China Economic Panel
China Economic Panel | Business survey | Greater China | Short-term forecast | Cyclical indicator | China
In October, the CEP Indicator climbs further and stands currently at 17.3 points.

In the most recent survey for October (29/09/2017–17/10/2017) expectations regarding the economic climate in China rose considerably, with the index climbing 9.0 points to a current level of 17.3 points (compared to 8.3 points in September). The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has thus once again come in well above the long-term average of 5.3 points.

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