Hans-Joachim Voth, Nico Voigtländer, Shanker Satyanath, 05 August 2013

The collapse of the Weimar Republic was a turning point in world history, bringing the murderous Nazi regime to power. This column argues that contrary to most conceptions of social capital, there can be negative outcomes to well-connected societies. Independent of ideology, dense social networks in interwar Germany greatly helped the Nazi party to rapidly and widely disseminate its messages. Putnam’s claims about the benefits of social capital for democracy need to be reassessed.

Almut Balleer, Britta Gehrke, Wolfgang Lechthaler, Christian Merkl, 12 July 2013

During the Great Recession, 25 of 33 OECD countries have used some version of short-time work, a form of publicly subsidised working-time reductions. This column argues that despite its popularity, knowledge of the macroeconomic effects of this measure is limited. Using Germany as a case study, it’s clear that the existence of a short-time work system stabilises the economy and reduces job losses by roughly 20% during a recession. However, short-time work is a lot less effective for Anglo-Saxon labour markets.

Giovanni D'Alessio, Romina Gambacorta, Giuseppe Ilardi, 24 May 2013

The ECB’s recent survey on household finances and consumption threw up some unexpected results – counter-intuitively, the average German household has less wealth than the average Mediterranean household. In line with a recent VoxEU.org contribution from De Grauwe and Ji, this article analyses the principal differences in wealth and income between the main Eurozone countries.

Paul De Grauwe, Yuemei Ji, 16 April 2013

A recent ECB household-wealth survey was interpreted by the media as evidence that poor Germans shouldn’t have to pay for southern Europe. This column takes a look at the numbers. Whilst it’s true that median German households are poor compared to their southern European counterparts, Germany itself is wealthy. Importantly, this wealth is very unequally distributed, but the issue of unequal distribution doesn’t feature much in the press. The debate in Germany creates an inaccurate perception among less wealthy Germans that transfers are unfair.

Lucrezia Reichlin, Domenico Giannone, Jasper McMahon, Saverio Simonelli, 29 March 2013

The Eurozone and US business cycles seems to have decoupled, but is Germany on the US or Eurozone side of the divide? This column presents recent results from the Now-Casting model on whether this US-Eurozone decoupling also applies to Germany. If this is right, the German stock market – which seems to predict Germany’s convergence to the US path – is due for a correction.

Thomas Grennes, Andris Strazds, 28 February 2013

Can European countries share their debts? This column argues that higher government indebtedness means larger household net financial assets. Thus, any pooling of European legacy debt would be considered unacceptable by countries with less government debt unless it also involved the pooling of households’ financial assets. Yet, this would be legally and technically insurmountable. The EU must face forced Ricardian equivalence: the countries with the largest legacy-debt burdens must reduce them by increasing the tax burden or, alternatively, reduce their budget expenditure.

William Kerr, Oliver Falck, Christina Günther, Stephan Heblich, 11 February 2013

Governments around the world are fostering industrial ‘clusters’, hoping to create agglomeration economies. Using the political division of Germany in 1949, this column argues that heightened firm density can raise costs for incumbent firms in addition to the often-cited agglomeration benefits. This is important for policymakers contemplating efforts to promote their local areas by targeted cluster initiatives and bidding to attract large firms. Policy efforts that are neutral in orientation – such as physical infrastructure investments or improving the generation and dissemination of knowledge – may be more effective alternatives.

Rudolfs Bems, Robert Johnson, 06 December 2012

With the rise of complex, globalised supply chains is the real effective exchange rate (REER), the most commonly used measure of competitiveness, now outdated? If it is, what should replace it? This column presents a ‘Value-Added REER’ and shows that it differs substantially from the conventional REER. Because it is possible to construct a new Value-Added REER from existing data, policymakers interested in improving their understanding of competitiveness might well consider including it in their toolbox.

Hermann Gartner, Thorsten Schank, Claus Schnabel, 22 September 2012

It is often argued that trade unions lead to higher wages but, according to the findings presented in this column, collective bargaining cannot be blamed for sticky wages in Germany during the 1990s.

Paul De Grauwe, Yuemei Ji, 18 September 2012

Germany’s large accumulation of TARGET2 claims has created fear that Germany stands to lose vast amounts of wealth if the Eurozone were to break down. After clarifying the issues using basic economic principles, this column shows that Germany could avoid large wealth losses by restricting euro-to-mark conversions to German residents.

Joshua Aizenman, Ilan Noy, 25 August 2012

In the years leading up to the global crisis, the US focused on subsidising home ownership, whereas Germany placed much more emphasis on education and vocational training. While it is easy to think that this explains the subsequent performance of the two economies, this column provides some much needed economic analysis.

Hermann Gartner, Christian Merkl, Thomas Rothe, 08 August 2012

The upside to a rigid labour market, so the argument goes, is that the downside isn’t so bad. This column compares evidence from the job markets in Germany and the US. It argues that Germany is actually far more volatile.

Paolo Manasse, 02 July 2012

Just as with Italy’s football team, Mario Monti has been hailed for beating the Germans – in his case at the recent EU summit. But this column argues that, just as with the football, Italy’s victory over Germany may soon lead to disaster.

Nicholas Crafts, 27 June 2012

Renewed calls are being made for a Marshall Plan for Greece. Yet this column argues that few people seem to understand what the Marshall Plan actually was. It suggests that repeating the 1940s’ recipe would mean a ‘structural adjustment programme’ targeting supply-side reforms and, as such, would probably appeal to Greeks even less than it would to Germans.

Kamil Yilmaz, 19 May 2012

Germany’s fiscal response to the crisis was timid compared with those of China and the US. This column uses business-cycle connectedness indices to show that Germany should follow in the footsteps of China and increase its domestic spending so that it will generate net positive connectedness to others. Germany was able to increase its exports thanks to the fact that countries like the US, China and Japan stimulated domestic spending significantly.

Sebastian Dullien, Mark Schieritz, 07 May 2012

The Eurozone debt crisis has led to increasing imbalances among Europe’s central banks, the causes and consequences of which are the subject of fierce debate. But this column argues that the discussions are missing a fundamental point – the extent to which the German financial sector and German savers benefit from this arrangement.

Karl Whelan, 29 April 2012

In recent years, instability in many European countries has led to large transfers of money into Germany. This in turn has led the Bundesbank to build up large credits with other central banks in Europe – via the TARGET2 system. Does this represent a risk to Germany in the event of a breakup of the euro? This column argues that Germany will have far bigger things to worry about.

Karl Whelan, 25 February 2012

Europe’s Fiscal Compact is being widely sold as the essence of prudent fiscal management. But this column argues that the rules in the Fiscal Compact severely restrict a country’s ability to use fiscal policy to stabilise its economy and will often require debt levels far below those considered sensible. The rules should be changed before they become a straightjacket.

Jan van Ours, Anne Gielen, 13 February 2012

Much research has documented that unemployment makes people unhappy. But does unhappiness spur the unemployed to look harder for jobs? And if so, why do governments need to help them find work with active labour market policies? CEPR DP8842 finds that the unhappiest of the unemployed do search harder for jobs, but don’t find them faster – suggesting that even the most motivated jobseekers could benefit from activation policies.

Jacob Kirkegaard, 06 February 2012

Europe’s new fiscal compact is seen by some as the death of Keynesian government spending. This column argues that such analysis is simply wrong. It says that there is still room for government spending in extreme situations, but that there are now more safeguards to maintain stability, reduce contagion, and placate German taxpayers.



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