Cloud Computing and Firm Growth
Cloud technology makes IT equipment more accessible to firms and facilitates a remote and mobile workforce. The authors analyze newly available data at the company level for the United Kingdom. They find that the use of cloud technology enables companies to grow faster, particularly those in the start-up phase. Cloud also allows older established companies to reorganize and allocate employment away from the headquarters. High-speed fiber broadband is an important prerequisite for both new and established companies to successfully implement cloud solutions.
Detailed summary
Full paper
Other CESifo Working Papers
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 Discussion about the European Recovery Fund
The economic crisis triggered by COVID-19 is well on the way to becoming more serious than the financial crisis of 2008 and the eurozone member states are facing several challenges to stabilize the economy. The eurozone has little room for maneuver due to monetary policy constraints and high levels of public debt.
It is crucial to ensure that policy at the European level adds value, with a robust infrastructure to ensure that no member state is left behind.
In the first episode of the EconPol Europe Policy Research Live online debates, ifo President Clemens Fuest and Antonia Díaz (Universidad Carlos III de Madrid; EconPol Europe) discuss the policy options for the eurozone and ask questions: “Is a European recovery fund an effective policy measure to deal with COVID-19 consequences?”
More about Clemens Fuest on the ifo Institute’s website
Clemens Fuest’s LinkedIn profile
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European Banks and the COVID-19 Crash Test
European banks are stronger today than they were on the eve of the 2007–08 financial crisis, thanks to the reforms that have taken place since then. But will they be able to deal with a health crisis closer to the Great Depression of the 1930s than the stress scenarios envisaged by the European Banking Authority for 2020? Access to central bank liquidity probably eliminates the risk of bank illiquidity, but it is not implausible that a bank insolvency crisis would have to be managed. The non-repayment of one in five loans would be enough to exhaust the current level of capital. The resolution mechanism would then have to be mobilized, which is unlikely to be sufficient in a context where, the risk of simultaneous defaults is increasing sharply.
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If the Objective is Herd Immunity, on Whom Should it be Built?
In the absence of a treatment or vaccine, there are two options available for managing COVID-19: long confinement of a large proportion of the population and the associated economic costs (Plan A), or to progressively build herd immunity by exposing the population to the virus (Plan B). But attaining herd immunity requires governments to expose a fraction of the population to the virus, and to recognize that some people in this targeted population will die. This paper uses standardized guidelines to identify “optimum” herd immunity policies but warns that the moral concerns related to such a policy would go against several decades of policy evaluation practice.
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COVID-19: Has the Time Come for Mainstream Macroeconomics to Rehabilitate Money Printing?
The expenditure necessary to prevent the COVID-19 health crisis turning into a long-lasting deep recession is enormous and raises the issue of how it should be financed: through new debt, or monetization? Monetization – defined as the financing of public expenditure through money creation by the central bank without being reimbursed by the government – has long been rejected by mainstream macroeconomics. This policy brief analyzes in detail some recent theoretical arguments of mainstream macroeconomics to rehabilitate monetization. The authors suggest that policy-makers consider monetization to finance COVID-19 related spending in the current macroeconomics context, combining secular stagnation features and a very high stock of public debt. In the specific context of the euro area, monetization raises important political issues.
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CEPS and EconPol Europe Lunch Debate: Eurozone after the Coronavirus Pandemic
The European debt crisis has brought about permanent changes in the eurozone. Now, a new and even more devastating crisis has hit the eurozone in the form of COVID-19 and the resulting economic impact. What comes after the coronavirus pandemic? This was discussed in the new EconPol series of Policy Research Live online debates. Given the political dynamics that are under way in the EU member states, will there be enough consensus in support of these policy shifts both in the eurozone’s core and in peripheral countries, or will they cause political turmoil?
Video documentation
More information about EconPol Europe
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ifo Topic: Coronavirus
What is the impact of the coronavirus on the economy? How should government packages of measures be assessed? These and other questions are being addressed by ifo researchers in the current crisis situation. All information from the ifo Institute is compiled on this topic page.
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Corona Industry Atlas
With the Corona Industry Atlas, the ifo Institute provides important information on the starting position of the individual industries in Germany. Structural characteristics and various development indicators are taken into account. From these facts it can be deduced how strongly individual industries are affected by the coronavirus crisis. On this basis, the exit options and economic prospects can also be assessed with regard to the post-coronavirus period.
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ifo Institute: Economic Contraction of 6.6 Percent in Germany Most Likely
The German economy will probably shrink by 6.6 percent this year and then grow from this low level by 10.2 percent next year, according to the updated ifo Economic Forecast for 2020/2021. “This is based on our evaluation of the ifo survey conducted among companies in May. On average, participants consider it most likely that their own business situation will return to normal in nine months,” says Timo Wollmershaeuser, Head of Forecasts at ifo.
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ifo Institute Praises New German Economic Stimulus Package
The ifo President Clemens Fuest and ifo climate expert Karen Pittel have praised the German coalition government’s economic stimulus package. Fuest said on Thursday: “The stimulus package is broad-based and for the most part well thought out. It combines incentives to stimulate consumption in the short term with impetus for public and private investment and support for small and medium-sized enterprises. Pittel said: “It is to be welcomed that the package explicitly takes climate-friendly future technologies and infrastructure into account.”
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German Economists Praise the Scale of Aid to the Economy
German economists have praised the scale of the aid provided to the economy during the coronavirus crisis: 60 percent consider it appropriate to increase government spending by EUR 353 billion and issue additional guarantees worth EUR 820 billion. This is the result of the Economists Panel, a survey by the ifo Institute and Frankfurter Allgemeine Zeitung of around 120 economics professors at German universities which was conducted ahead of the new package. “This general praise goes hand in hand with criticism of the details of certain measures under discussion, such as the scrappage scheme,” says Niklas Potrafke from the ifo Center for Public Finance and Political Economy.
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ifo Business Climate Index Recovers (May 2020)
Sentiment among German companies has recovered somewhat after a catastrophic few months. The ifo Business Climate Index rose from 74.2 points (seasonally adjusted) in April to 79.5 points in May. Even though companies once again assessed their current situation as slightly worse, their expectations for the coming months improved considerably. Nevertheless, many companies are still pessimistic about their business. The gradual easing of the lockdown offers a glimmer of hope.
Other Economic Indicators:
ifo Employment Barometer
ifo Export Expectations
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Political Stability and Economic Prosperity: Are Coups Bad for Growth?
Do countries need a stable political environment to thrive? Many countries with low levels of political stability are among the fastest growing economies in the world, including China, Indonesia, India and Bangladesh.
This paper provides strong evidence that political instability damages economic growth.
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Economic Research on COVID-19
Here you will find an overview of coronavirus research in the CESifo Network.
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ifo Annual Meeting 2020
On 18 June 2020, Joe Kaeser, CEO of Siemens AG, and other experts from business, science, and politics will discuss “COVID-19 and the economy – how endangered is Germany’s prosperity?” The ifo annual meeting will be held as an online event for the occasion and will be broadcast live on the internet. Check out the full program here.
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The Passing of Alberto Alesina (1957–2020)
Most of you will have received the sad news that our colleague and friend Alberto Alesina, professor of political economy at Harvard University, passed away on 23 May 2020. Alberto Alesina was one of the leading economists of our time and a pioneer of the field of modern political economy. Many of us were inspired and guided by his work.
Alberto was a member of the CESifo Research Network and was a Distinguished CES Fellow. He delivered the Munich Lectures in Economics in 2006 on “The Choice of Institutions”. In his laudation, his co-author and friend Torsten Persson characterized Alberto’s work as follows: “Alberto is an unreconstructed macroeconomist in that he does not shy away from asking ‘big questions’. He also does not shy away from making his points in a simple way. When Alberto writes down a model, or carries out an empirical analysis, his main aim is not maximal generality, but maximal transparency in bringing home the main idea.” He was an excellent teacher and speaker, who combined academic rigor with deep interest in the real world. He will be missed very much, but his work will continue to bear fruit.
Clemens Fuest
Obituary from Harvard University
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Guests
Every month, CESifo and CES host guest researchers from different parts of the world. Learn a bit more about what they are working on and who they are:
Paul Hünermund, Maastricht University, will be visiting CESifo from 15–19 June 2020.
Jan Stuhler, Universidad Carlos III de Madrid, will be visiting CES from 1 July–31 August 2020.
Christopher Rauh, Université de Montréal, will be visiting CES from 1–31 July 2020.
Andreas Lichter, Düsseldorf Institute for Competition Economics (DICE), will be visiting CESifo from 27–31 July 2020.
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The Bulletin Board is a place where members of the CESifo network can post news and messages that are of interest to the research community and to all CESifo Newsletter readers. If you have anything you’d like to share, please feel free to contact us at services@cesifo.de.
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