Latest Press Releases

For the first time since the reformulation of its strategy, the ECB Governing Council discussed the future course of its monetary policy. With today’s decision, the ECB has changed its monetary policy outlook. Interest rates are now to be kept low until the ECB expects inflation to reach and stay at two per cent for the foreseeable future. It explicitly allows for transitional phases in which the inflation rate is above the two per cent mark. Previously, inflation prospects of “close to, but below two per cent” were named as a precondition for an interest rate hike. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, explains:

Read more

There is still considerable room for improvement in Germany when it comes to knowledge of economic facts: Although Germans are better informed than average in a global comparison, they are only in the middle of the pack compared to other industrialised countries. Interestingly, misjudgements are usually more pessimistic than the reality. Germany’s economic performance is often assessed too negatively, for instance, with regard to the country’s economic performance, the level of unemployment, the employment rate of women, and inequality. This is the result of a research project conducted by ZEW Mannheim with the support of the Brigitte Strube Stiftung.

Read more

During the coronavirus pandemic, companies in Germany reduced their innovation activities less than anticipated. This is shown by a recent study by ZEW Mannheim on behalf of the Federal Ministry of Education and Research. German companies that participated in the ZEW Innovation Survey from March to July 2020 planned to cut their innovation spending by an average of about two per cent in 2020. “By comparison, during the 2009 financial crisis, companies lowered their innovation spending much more drastically, by an average of eleven per cent,” says ZEW researcher and co-author of the survey, Josefine Diekhof, PhD.

Read more

The reform of the European Emissions Trading Scheme (EU ETS) presented today by the EU Commission will reduce the cost of climate protection in 2030 from 2.8 per cent of EU-wide consumption to 1.9 per cent. The proposal, however, does not exploit the full savings potential of 1.1 per cent. A smart distribution of the CO₂ budget could save the EU up to 152 billion euros in economic costs. The Commissions’ current proposal, on the other hand, reduces climate protection costs by only 81 billion euros, mainly by introducing a second emissions trading system. This is the result of a recent calculation by ZEW Mannheim based on a macroeconomic simulation model.

Read more

A more powerful IT infrastructure and government funding options would encourage more companies to use artificial intelligence (AI) applications. The main obstacles preventing companies from making greater use of this technology are the high development and implementation costs and the lack of skilled workers. The companies surveyed still see significant room for improvement for Germany in terms of AI in comparison to other countries. These are the results of a survey conducted by ZEW Mannheim on behalf of the Federal Ministry for Economic Affairs and Energy among more than 950 companies actively using AI or with a potential to use AI.

Read more

The ECB Governing Council has decided to change its inflation target. Previously, the central bank aimed to keep inflation “below, but close to, 2 per cent”. The “below but close” wording will be dropped in future, so that the ECB will now pursue a symmetrical 2 per cent inflation target. Proposals for formulations that explicitly set the target at an average inflation rate, on the other hand, have not gained acceptance. In addition, costs of housing, including for owner-occupied real estate, shall be more strongly taken into account in the measurement of inflation. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter:

Read more

Financial policies proposed by parties running in the federal election differ greatly in their effect on low-income and high-income households. Tax relief proposed by FDP and CDU/CSU would greatly benefit high-income groups, while the political programmes of SPD, the Left Party and the Greens would increase the disposable income, combining net wages and social transfers, for low and medium-income groups. This is the result of an analysis conducted by a team of researchers at ZEW Mannheim, who evaluated the effects of central reform proposals on taxation, minimum wage, mini and midi-jobs, social security, and family policy on private households, on behalf of the daily newspaper “Süddeutsche Zeitung”.

Read more

The ZEW Indicator of Economic Sentiment for Germany decreased in the current July 2021 survey, falling 16.5 points to a new reading of 63.3 points. However, expectations for the next six months still remain at a very high level. The assessment of the economic situation in Germany once again improved strongly and stands at 21.9 points in July, 31.0 points higher than in the previous month. The economic situation in Germany is now rated similarly to how it was at the beginning of 2019, with the corresponding indicator now being back in positive territory for the first time in two years.

Read more

The monetary policy of the European Central Bank has been deemed unconstitutional in an expert opinion by former Constitutional Court judge Paul Kirchhof. According to the expert report, the ECB’s policy represents an expropriation of savers and violates the right to private property. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter:

Read more

In Germany, the COVID-19-related tax relief measures taken so far are not ambitious enough to cushion the impact of the crisis. In their current form, they mainly relieve large companies, while small companies and start-ups hardly benefit at all. Further tax measures are therefore necessary to ensure that German companies are able to weather the crisis well. These are the results of a study by ZEW Mannheim on behalf of the Friedrich Naumann Foundation for Freedom.

Read more