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Ifo Policy Issues

Economic policy advice is a service offered by the Ifo Institute. Identifying reform requirements for political institutions, the media and the general public is consequently an important element of the Ifo Institute’s mission. In the section on publications and press echo, we have collected the issues that have received public attention as a result of Ifo initiatives.

Ifo Policy Issue: Migration

From an economic viewpoint there are good reasons for the free movement of labour not only within a country but also beyond country borders. As long as the migration is only induced by international wage and productivity differences, and the labour markets of the target countries are sufficiently flexible and absorptive, positive welfare effects arise from migration for both the domestic and migrant population. Migration then assures an efficient distribution of labour, since the self-regulation of the labour markets continuously and optimally adjusts migration to the circumstances in the source and target countries. In some market segments competition for jobs will intensify and put pressure on wages in the host country. Since at the same time, however, capital earnings and the wages for complementary labour increase, this country too gains on the whole. read on Ifo Policy Issue: Migration

Ifo Policy Issue: Euro Crisis

The financial market crisis touched off by the US real-estate market in 2007 that has pushed the entire world economy into recession has been a massive burden to the public budgets in nearly all countries of the world. In addition to tax revenue shortfalls and higher costs for social benefits, governments have been massively burdened by bank rescue measures and economic stimulus packages. read on Ifo Policy Issue: Euro Crisis

Ifo Policy Issue: Target Balances

A heated debate has arisen among pundits regarding Target2. Since the end of 2007, the German Bundesbank’s claims within the Target system have expanding from virtually nothing to more than 320 billion euros. Whereas the Bundesbank has tried to allay criticism by asserting that the balances within the European currency union offset each other, the Ifo Institute sees considerable risks here. In several articles in publications such as Wirtschaftswoche, the Süddeutsche Zeitung and the Frankfurter Allgemeine Zeitung, we have warned against a credit replacement policy and have called for an end to the uncontrolled lending to the national banks of the troubled euro countries. read on Ifo Policy Issue: Target Balances

Ifo Policy Issue: Population Policy

Germany is ageing more rapidly than almost all other countries in the world. In 2007 it had the lowest number of new-born children relatively to the size of its population of all OECD countries. read on Ifo Policy Issue: Population Policy

Ifo Policy Issue: Energy and Climate Policy

There has been a great deal of activity in German energy and climate policy, which has successfully raised public awareness of key issues. CO2 emissions from the production of goods and services have subsequently fallen considerably, meaning that the Kyoto target will probably be achieved. However, the decrease in the production of greenhouse gases has been accompanied by an increase in imports of CO2-intensive goods, meaning that the emissions produced by German consumption are not following this positive trend. This is the result of one-sided efforts to reduce emissions by a few countries and should prompt a reassessment of climate policy instruments. read on Ifo Policy Issue: Energy and Climate Policy

Ifo Policy Issue: Free Trade Agreement

Proposals for a comprehensive free trade agreement (covering the trade of goods and/or services) between the USA and the EU have been repeatedly put forward in the past. A Trans Atlantic Free Trade Agreement (TAFTA – Trans Atlantic Free Trade Agreement) should be considered against the background of (i) the eroding competitiveness of the industrialized states versus emerging economies like China and India, (ii) the long-term standstill in multi-lateral trade liberalization in the framework of the WTO and (iii) the urgent need for growth-boosting reforms highlighted by the crisis. A TAFTA would go further than the dimensions of all existing free trade agreements and create a free trade area that would cover almost 50% of global economic output, but account for a mere 11.8% of the world's population. read on Ifo Policy Issue: Free Trade Agreement

Ifo Policy Issue: Financial Market Crisis

Limited financial crises are not uncommon. Historical examples are the world debt crisis at the beginning of the 1980s, the Savings & Loan crisis at the beginning of the 1990s or the Latin America crisis from 1998 to 2002. Although the regions involved suffered from the aftermath, sometimes for years thereafter, none of these crises approached the proportion of the global financial crisis that reached its climax in autumn 2008 with the collapse of Lehmann Brothers, one of the world’s largest investment banks, and which took the international financial markets to the brink of disaster. read on Ifo Policy Issue: Financial Market Crisis

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