In Ifo Working Paper No. 162 Christian Bjornskov and Niklas Potrafke investigate empirically how party ideology influenced size and scope of government as measured by the size of government, tax structure and labor market regulation in 49 US states over the 1993-2009 period. They employ data on the ideological mapping of US legislatures that considers spatial and temporal differences in Democratic and Republican Party ideology. The main result suggests that Republican governors have been more active in deregulating labor markets. Furthermore, they find that ideology induced policies were counteracted by certain types of divided government which occurs when government has a different party affiliation than the majority of at least one of the chambers (House and Senate). Details

How safe and sustainable is nuclear energy? These are the questions that Professor Andreas Pautz, Institute Director at the Ecole Polytechnique Federale of Lausanne, will focus on in the framework of the Munich Seminars. On Monday 27 May 2013, he is due to give a seminar entitled: “The Outlook for Nuclear Energy and Safety Research in the Context of the Energy Debate”. Pautz will explain that there are alternative concepts for reactors, which not only use uranium and thorium resources far more sparingly, but also largely avoid the generation of long-lived radiotoxic waste. The seminar will be given in German in the Ludwig-Erhard-Saal of the Ifo Institute and will be livestreamed via the internet on the CESifo web site. It is scheduled to begin at 6.00 p.m. Details

Contrary to standard microeconomic principles, it is by now well understood that income is not fungible. For example, the label of a government transfer can induce individuals to make expenditure decisions that are skewed towards the label. In Ifo Working Paper No. 163 Timo Hener shows that child benefits are disproportionately used for savings assignable to children. His results suggest a significant positive labeling effect on longterm savings. However the labeling effect is weak when looking at consumption goods. Details

Using firm-level survey data for the West German manufacturing sector, Rüdiger Bachmann and Peter Zorn in CESifo Working Paper No. 4218 revisit the technology-driven business cycle hypothesis for the case of aggregate investment. They construct a survey-based measure of technology shocks to gauge their contribution to short run investment fluctuations. They find evidence for technology shocks explaining a significant fraction of the fluctuations of aggregate investment growth. However, the larger part must be attributed to finance and demand shocks. Details

Heightened inflation uncertainty can have subsequent economic costs. Uncertainty distorts the signaling effect of price systems and makes stability-oriented monetary policy more difficult to implement. In CESifo Working Paper 4194 Steffen Henzel and Elisabeth Wieland look at the question of whether there is an international intertwining of inflation uncertainty in the G7 states. They show that inflation uncertainty is internationally synchronized and that the linkage grows even higher over time. Moreover, an international component can be identified that exercises a decisive influence over national inflation uncertainty in G7 states. Details

May 15, 2013: The Ifo World Economic Climate Indicator continued to rise, even if only slightly. Both assessments of the current economic situation and the six-month economic outlook improved slightly compared to the previous quarter. There are a growing number of signs that the world economy is stabilising. Details

May 8, 2013: The Ifo Economic Climate Indicator for the euro area remains at a low level. Assessments of the current economic situation are slightly less favourable than in the last survey. Expectations for the six-month economic outlook improved only slightly. An economic recovery has not yet started. Details

May 4, 2013: The Ifo Business Climate Index for German trade and industry declined once again in April. The business climate indices for Eastern Germany and Saxony also fell sharply. Saxon survey participants were notably far less positive about their current business situation than in March. They also expressed greater pessimism than last month about their six-month business outlook. Details

May 1, 2013: The Ifo Export Climate improved in March 2013, reaching -0.55 points. The increase in the export climate is due to an improvement in pricing competitiveness. This, in turn, can be attributed to the weakening of the euro against the US dollar in March. The euro depreciated by 3% against the US dollar in March versus the previous month. Details

Apr 30, 2013: Credit constraints for German trade and industry edged downwards by 0.1 percentage points compared to March. Around a fifth of the companies surveyed reported a restrictive credit policy on the part of banks. Despite recent developments in the euro crisis, there have been no significant changes in the favourable financial environment of German companies. Details

Apr 30, 2013: The Ifo Employment Barometer for German trade and industry, including the service sector, fell in April. German companies are very cautious about recruiting additional staff. Details

Apr 29, 2013: The Ifo Business Climate for Eastern German trade and industry clouded over considerably in April. Eastern German survey participants assessed their current business situation considerably less optimistically than last month. They also expressed greater caution about their six-month business outlook. After a strong start to the year, the Eastern German economy is losing momentum slightly. Details

Apr 24, 2013: The Ifo Business Climate Indicator for the German service sector fell considerably in April. Assessments of the current business situation were significantly less positive than last month. The service providers surveyed were also slightly less optimistic about their business outlook. They nevertheless plan to recruit additional staff. Details

Apr 24, 2013: The Ifo Business Climate Index for German industry and trade fell in April. Although the majority of companies assessed their current business situation as good, they were far more cautious than last month. Their expectations regarding future business developments were also lower. The German economy is taking a breather. Details

Apr 10, 2013: After last month’s sharp rise, the Ifo Business Climate Index for German trade and industry edged downwards in March. The climate indicators for Eastern Germany and Saxony also deteriorated this month. Saxon survey participants remain thoroughly satisfied with their current business situation, but are far more pessimistic about their future business developments. Details