The Department of Public Finance engages in research and policy advice in these areas:
The department focuses its research focus on the challenges that result from the growing economic and political integration in Europe.
The federal budget is analysed within the framework of short-term developments as well as with regard to its long-term sustainability and the evolution of the public debt. Work on the public budget is also utilised in business-cycle analyses. As a member of the working group on tax-revenue estimates at the Federal Ministry of Finance, the Ifo Institute contributes its expertise to the official forecasts of German tax revenues. This work is based on Ifo survey data and on supplementary official statistics. Studies on governance aspects of fiscal policy supplement this work. Research on the governance aspects of fiscal policy is also carried out. For the tax-revenue forecasts, the economic forecasts of the department for Business-Cycle Analyses and Surveys are needed; in return the department of Public Finance is supplied with the results of the tax-revenue estimates. The long-term debt projections and the role of social transfers in the public budget are also closely linked with the pension projections and the debate on the future of the welfare state, linking up with the Ifo department for Social Policy and Labour Markets.
The department contributes to the public discussion on the reform of the German tax and transfer system, both with current commentaries and with comprehensive research. The emphasis is on the consequences for tax policy of increasing mobility and advancing European and worldwide economic integration; here the department’s research agenda dovetails with that of the Ifo department for Foreign Trade. The work is based on empirical studies and comparative international analyses of fiscal and tax policies. For research in the area of company reactions to taxation, the department uses the services of the Economic and Business Data Center (EBDC), which is part of the department for Business Cycles Analyses and Surveys. There are also strong contacts to the department of International Institutional Comparisons since the locational and investment decisions of global enterprises are dependent on the institutional decisions of the countries.
Another focus of the department’s research and service activities is the municipal budgets and the design of the relationships between the different governmental levels in the federal system. This reflects the federal dimension of the public sector in Germany and increasingly also in Europe. The examination of the sub-national level also leads to well-founded analyses of the function of fiscal and tax policy under conditions of high mobility. At the same time, valuable insights result regarding the requirements and problems of vertical and horizontal fiscal relationships. In terms of the research content, there are strong ties to the Ifo department of Human Capital and Innovation, since education is a public good of major importance that is provided at the local level. There is also interdependence between educational policy and mobility, which raises important distributional questions.
RSS