#ZEWPodcast: “Fear Won’t Get Us Anywhere!”
#ZEWPodcastZEW Podcast with Achim Wambach
2023 has been quite the rollercoaster year. While at the beginning, concerns revolved around inflation and fears of a gas shortage, as the year draws to a close, the focus has shifted to the Federal Court of Justice’s ruling on the debt brake and its implications for Germany’s future, as well as the Middle East conflict. In the latest episode of the ZEW podcast (in German), Professor Achim Wambach, president of ZEW, looks back on the most important topics of the year with podcast host Theresa Heep. They discuss the overall economic situation, Wambach’s research journey to North America, and touch on topics such as the green transformation and housing shortage. Additionally, they provide a glimpse into what 2024 may hold.
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Returning from the USA and Canada, Achim Wambach reflects on Germany’s economic situation from that perspective. In the US, “the focus is on Asia as the growth region, while they perceive Europe as relatively quiet. There is an appreciation for our China strategy, yet concerns linger about Europe stagnating, and growth not picking up as it should.” From a German perspective, Wambach cites the ongoing gas crisis and the challenges of the green transition, especially for the industrial sector, as major concerns.
Too little innovation and research
Despite the debt brake, the ZEW President considers it necessary to make investments and implement the transformation. Priorities must be set to establish a socio-ecological market economy. Contrary to the views of some politicians, Wambach deems subsidies unsuitable as they focus too much on production and neglect innovation and research.
Instead, he advocates for markets to drive research as this gives companies the opportunity to earn money. For instance, in green lead markets: If companies were required to incorporate ten per cent green aluminium in their production, with the percentage increasing by ten per cent each year, this would create a market for green aluminium and reward companies “with innovative, cost-effective approaches.”
A successful year for ZEW
2023 was a challenging year for society at large. ZEW, on the other hand, had good reason to celebrate after receiving top marks in its evaluation by the Leibniz Association. Looking ahead to 2024, Wambach draws particular attention to fiscal policy: “Monetary policy isn’t a clear-cut science, as it heavily relies on expectations. Successfully combating inflation without raising unemployment or pushing the economy into a recession would indeed be a remarkable achievement for both the ECB and the Fed.”
