In recent years, our understanding of economics has changed. Up to the 1970s economic policy was dominant, especially outside the universities. Then the American mathematisation of economics reached Germany and took over entire university faculties. Economic policy as a discipline was pushed aside. What contribution is modern economics now making to help understand current economic-policy problems? Lutz Arnold, University of Regensburg, argues that economics is no more immune to misguided developments than other academic disciplines. However, the fact that only a small portion of current research is to be found in the economic-policy relevant textbooks and that economists did not foresee the current economic and financial crisis is not evidence of a crisis in economics. On the contrary, economics is a theoretical and empirical structure that has been built up over the decades and that continues to develop. Olaf Hübler, University of Hanover, refutes the accusation that economics, being too strongly mathematical and not sufficiently taking into consideration human behaviour, cannot make a relevant contribution to the forcasting, explantion and solving of the crisis. Conjuring up a crisis in economics is a false approach in his opinion. Instead, we should pursue the course we are on of a combined theoretical and empirical approach: "Measurement without theory is just as useless as theory that avoids empirical verification. Heterogeneous behaviour and institutions must be integrated even more strongly in the model-based theoretical analysis. The stimulus that emanates from laws, agreements and historically evolved factors must be examined even more precisely". For Peter Oberender, University of Bayreuth, it is important to improve the international presence of German economists. At the same time, seeing the merits of German Ordungspolitk in the context of intellectual history and also vis-à-vis other approaches to economics should not be viewed as philosophical ballast but can provide useful orientation in the discussion on the border areas of economic analysis. We should welcome a pluralism of methods as "a strength of our own discipline". And Alexander Karmann and Andreas Bühn, Technical University of Dresden, argue that economic research in Germany must continue to open itself, with the goal of attaining international standards.
Tilmann Rave
In the past there has been a strong concentration on individual case studies to explain the determinants, diffusion mechanisms and effects of environmental innovations. In order to place research on a new and broader basis, the Ifo Institute is currently conducting a study on the origin, diffusion and effects of environmental and sustainable-development innovations. With the help of a cross-sector business survey and a patent analysis on the basis of the database of the European Patent Agency, information with an innovation and environmental orientation is to be gained. This article provides an overview of the empirical results achieved thus far. One result is that for all innovation types the innovation propensity increases with the size of the enterprise; large firms benefit more from economies of scale than small firms or innovate at least more frequently. It is striking with regard to the ecologically most important innovations that in two thirds of all cases this is promoted very strongly or strongly by prior innovation activities. With regard to the type of environmentally friendly measures, decreasing CO2 emissions and energy consumption outweighs other measures.
Beate Schirwitz, Christian Seiler and Klaus Wohlrabe
The first part of this series of articles looked at the data situation. The second part now analyses the business cycle in the German federal states with the help of turnover data in manufacturing. First of all, the standard approaches in the literature for the definition of a business cycle and for the delimitation of its stages are discussed. The article focuses on the classical business cycle, presenting three dating methods. After discussing the specific features of processing the data, a presentation and discussion follows on the conventional cycle dating which gives us a chronicle of economic activity for the German federal states. If we compare the frequency of the cycles with those for Germany as a whole, it becomes clear that in this analysis significantly more turning points can be identified.
Klaus Abberger, Christa Hainz and André Kunkel
In order to determine whether the type of bank influences the likelihood of credit financing, the Ifo Institute, in its monthly business survey, asked manufacturing firms about their relationship to their primary banks. With the survey information, it was examined whether there is a difference in loan policies depending on the type of bank. In the assessment of the survey participants, private commercial banks and federal-state banks are currently especially restrictive in awarding credit; co-operative banks and savings banks are evaluated as less restrictive.
Erich Gluch and Ludwig Dorffmeister
Since the outbreak of the financial crisis in 2007, residential construction in Europe has been declining. The financial and economic crisis has also had an extremely negatively effect on the real-estate market. Prices for new housing construction have fallen and unemployment has risen in most European countries; at the same time banks have become increasingly restrictive in their lending policies. This has been a major contributor to the clear decline in construction activity. Especially in countries that built more than was required in the boom phase, the situation is especially bad since numerous unsold objects now burden the market. In addition to new construction, which is expected to weaken by about 20 percent this year in the appraisal of the 19 Euroconstruct institutes, the construction sector "renovation and modernisation" has also been affected by the crisis. Construction measures on existing housing units, however, are expected to decline by only about 3½ percent. Demand will remain weak into the year 2010. In 2011 at the earliest some recovery in the whole sector of residential construction will occur.
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