Four years ago, the Neue Markt was set up at the Frankfurt Stock Exchange and enjoyed a successful start. For the past year, however, stock prices have not only declined but numerous stocks have also collapsed. Nevertheless, in the opinion of Prof. Bernd Rudolf, University of Munich, this is no cause for more government regulation; instead, the "self-regulation of the exchange" should be strengthened. Dr. Bernhard Duijm, University of Tübingen, also ar-gues that more government regulation is no guarantee of greater protection for investors. "Everyone should be aware that even far-reaching regulation cannot prevent speculative bubbles and herd behaviour. Extensive government regula-tions could create a feeling of security that can never exist on the stock mar-kets."
Rigmar Osterkamp
Spending on health services in Germany is extremely high in an international comparison. But despite the high costs, life expectancy in Germany is only moderately long. This implies a low economic efficiency of the health system. This is underscored by a 191-country comparison made by the World Health Organisation which contrasts health spending with life expectancy.
Albert Müller and Arno Städtler
The investment climate in Germany has cooled down. The worsened sales prospects of export-oriented industries will have a negative impact on the investment propensity of the affected German firms, and the largely more unfavourable depreciation rules in effect since the beginning of 2001 will have an additional dampening effect. Investment growth in plant and equipment, which plays a key role in international competition for future income and employment opportunities, will be weaker during the forecast period (2001: 6.4% and 2002: 6.7%) than in 2000 (8.4%).
Joachim Gürtler, Erich Langmantel and Arno Städtler
After years of preparation, the Ifo Institute, in co-operation with the German Federation of Leasing Companies, has launched an indicator for the development of plant and equipment expenditure in Germany. Although it is still too early for a final assessment, it is already evident that the business expectation survey of leasing companies has a clear lead of about half a year over the investment figures published by the Federal Statistical Office and that the survey is an accurate indicator for investment in plant and equipment. The results of the latest survey indicate that spending growth in the first half of 2001 will amount to 6½%.
Oscar-Erich Kuntze
In 2000 the robust economic growth of the previous year was only surpassed in the first quarter. However, real GDP expanded as a result of the large overhang at the beginning of the year by 4.1%. The situation on the labour market continued to improve. The unemployment rate fell to an annualised 14.1%. Consumer prices rose clearly by 3.5%. In 2001 GDP will increase by 2¾% and the unemployment rate will decline to 13½%. Consumer prices are expected to increase by 3½%.
Wolfgang Ochel
In Germany the relative disposable income of young people falls below the OECD average and that of the elderly in Germany is above the average. Young people also lose out when the poverty rate is taken into consideration. According to OECD data, 13.7% of young people between 18 and 25 and 10.6% of young people under 18 lived in poverty in the mid-1990s compared to only 7.9% of the 51 to 65 age group and 10.4% of those over 65, so that youth poverty is higher than old-age poverty. This is primarily the result of the distribution of public transfers among the different age groups.
Georg Goldrian
A comparison of the forecast performance of the Ifo business expectations and the ZEW business-cycle expectations shows that although the lead time of the Ifo indicator is shorter, it is also more stabile. The marked variance of the ZEW indicator only permits a correspondingly imprecise dating of expected economic developments. The early indicator quality of the Ifo business expectations holds up well in this comparison.
Hans G. Russ
The worsening of the business climate in German trade and industry continued in April. Especially in west Germany, the assessments of the current situation were worse than the previous month. In east Germany both the business situation and the expectations trended downwards: the climate indicator registered 16.5 percentage points, the lowest level since June 1996.
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