In order to reduce public indebtedness in Germany, a fundamental re-structuring of federal-state financial relationships is necessary. In the opinion of Jörg-Uwe Hahn, Hesse FDP and member of the Federalism Commission II, it is necessary, in addition to a strict prohibition on new borrowing, to strengthen the financial autonomy in particular of the federal states but also of the federal government and municipalities. A genuine tax autonomy presupposes also granting legislative competence to the federal states in those areas where they are entitled to tax revenue. For Kai A. Konrad, Social Science Research Centre Berlin (WZB), the federal states, not the federal government, are the main problem. In cases of extreme budgetary restraints, they could look for help from the community of the federal government and the federal states. Many see the reform "as a welcome chance to achieve redistribution profits at the expense of other regional authorities". Eckhard Janeba, University of Mannheim and member of the Scientific Advisory Board of the Federal Ministry for Economics and Technology (BMWI), stresses that constitutional rules for limiting debt are an important instrument for achieving long-term, sound financial policy, He also sees the danger, however, "that decisions on the budget and new borrowing can become a problem of the experts, who are decoupled from an open political discussion. This should be prevented. The proposal of the BMWI Scientific Advisory Board goes in the right direction by not insisting on an identification of the causes of debt and by returning budgetary decisions to political middle ground by qualified majority decisions. Max Groneck and Robert C Plachta, University of Cologne, introduce a reform concept whose components are the introduction of a credit limit rule with obligatory sanction mechanisms, an expansion of the tax autonomy of the federal states, a deficit reduction plan as well as partial debt reduction.
Wolfgang Nierhaus
Since the comprehensive revision of the National Accounts System in spring 2005 with its change-over to fixed prices based on the previous year, the Federal Statistical Office now presents real results primarily in the form of chained indices. In their Joint Economic Analysis, the economic research institutes publish real forecasting values on the basis of chained absolute values. This article presents the two concepts and discusses their pros and cons.
Klaus Abberger
Since 2006 the Ifo Institute has calculated and published the Ifo Employment Barometer as an indicator for developments on the German labour market. It is based on the survey results from the monthly Ifo Business Survey. The Ifo Employment Barometer gave early signals that the labour market reached its cyclical low point in 2003. In the following months the barometer increasingly climbed and thus pointed early and reliably to the positive labour market development of recent years. Currently the Ifo Employment Barometer continues in the "high" range. On this basis the labour market in Germany should remain favourable this spring.
Matthias Balz
Food produced according to ecological guidelines is winning increasingly stronger consumer approval. Almost all consumer sectors are orienting themselves to the growing demand for products and services compatible with the environment. The organic consumer trend and a growing worldwide supply are stimulating the development of organic agriculture and bordering sectors.
Klaus Abberger and André Kunkel
Only few enterprises have voiced complaints about impaired financing conditions due to the financial market crisis. This is seen in a current survey of enterprises by the Ifo Institute. The great majority of the enterprises (82%) reported unchanged financing possibilities. In the coming three months, about 19% of the enterprises fear that these conditions will worsen. These are offset, however, by survey participants who expect an improvement of the situation. Firms are not facing a credit crunch, according to these results.
Hans-Werner Sinn
In the current discussion on the introduction of minimum wages, the growing earnings gap in Germany is frequently mentioned by minimum-wage advocates. This appraisal is backed up with a reference to real wage development in Germany. But for this development the price-adjusted "net earnings per employee in the overall economy" is mostly used. Is this an adequate measurement of prosperity? And how high in fact are the transfer payments that are made available to a recipient of Unemployment Benefits II (ALG II) with and without extra earnings? This article contains more information on a statistic that is often used in the public discussion.
Erich Gluch
According to the survey results of the Ifo Institute, the business climate of freelance architects improved slightly at the beginning of the first quarter of 2008. The modest brightening was not the result of more favourable assessments of the business situation but solely due to slightly budding optimism regarding the business outlook.
The Ifo Business Climate for German industry and trade cooled perceptibly in April. The surveyed enterprises assessed their current business situation by far more unfavourably than in the previous month. Also with regard to the six-month business outlook, they were more sceptical than in March. After a good beginning to the year, the survey results indicate that there will now be a somewhat slower pace of economic activity.
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