Newsletter September 2021

For two years, ZEW Mannheim and the foundation “Klimastiftung für Bürger” have been developing a way to enter into dialogue with young people: the simulation game “Climate Cabinet”. The game vividly simulates how Germany can become climate-neutral, but also what challenges need to be overcome in the process. The simulation game has now been completed and can be booked daily at the Klima Arena in Sinsheim.

How resilient is Europe’s fiscal framework to other future crises after COVID-19? This question is at the heart of this year’s EconPol Europe’s annual conference to be held virtually on 13 and 14 October. EconPol Europe – The European Network for Economic and Fiscal Policy Research – is a unique collaboration of 14 policy-oriented university and non-university research institutes, including ZEW. For the fifth time, the conference brings together expert network members from across Europe with politicians, policymakers, researchers, and journalists.

The conference opens with a keynote address and is followed by a panel debate on fiscal policy for the post-covid era: US vs. EU, with renowned experts Olivier Blanchard, Debora Revoltella, Claudia Sahm, and Maarten Verwey. The following sessions have an academic focus. Leading economists from the EconPol network present their latest research on such highly topical issues as climate policy and (fair) international taxation. In a panel on the second day of the conference, ZEW economist Dr. Sebastian Blesse presents a survey experiment among German citizens and politicians on the question whether misinformation undermines political competition. Participation is free of charge.

The German Real Estate Finance Index (DIFI) by ZEW Mannheim and JLL continues its upward trend. In the third quarter of 2021, it increases for the fifth time in a row and stands at 5.6 points (up 8.9 points compared to the previous quarter). This is the first time since the fourth quarter of 2017 that the index has moved above the zero mark.

As the coronavirus pandemic continues to slow sown global markets, China’s economy is booming like the crisis never happened. More importantly, China is making massive investments in innovation in a bid to become the global leader in technology.

How is creative destruction connected to innovation? Can competition policy stimulate industrial dynamics? How to solve Europe’s ‘unicorn problem’? On 14 September 2021, ZEW President Professor Achim Wambach and Professor Philippe Aghion, Collège de France INSEAD and London School of Economics, have discussed these questions. The French economist also presented his book “The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations” at the seventh #ZEWBookTalk.

For years, a decline in productivity growth and a slowdown in industrial dynamics have been clearly visible in almost all sectors in Germany. Policymakers fear that this will have long-term effects on economic growth and employment. What is needed are significantly stronger business and productivity dynamics. But how can this be achieved? Especially companies in the low-tech sector are important drivers of productivity growth. So far, however, they have not been given enough attention by policymakers, as a recent study by ZEW Mannheim on behalf of the Bertelsmann Stiftung shows.

The rapid expansion of renewables has created new challenges for security of supply. Long-term forward contracts could help to address them.

Economic experts expect consumer prices to continue to rise, but still consider this to be only a short-term phenomenon. Moreover, they are confident that the German economy has now embarked on a fairly stable growth path. This is the result of the business cycle tableaus by ZEW Mannheim and the German daily newspaper, Börsen-Zeitung.

Germany will elect a new federal government on 26 September. Parties’ election campaigns are in full swing. As always, money is a crucial factor to win votes. In their election programmes, parties propose ideas to restructure taxes and the social security system. In the #ZEWPodcast, Professor Sebastian Siegloch, head of the ZEW Research Department “Social Policy and Redistribution”, explains how these reform proposals are reflected in citizens’ account balances.

ZEW Mannheim mourns the death of Dr. Dr. Bettermann, who passed away on 19 September 2021 at the age of 74. The former spokesman for the company management and partner of Freudenberg & Co. had been a member of ZEW Sponsors’ Association for Science and Practice since 2001. In 2005, he took over the chairmanship of the association until 2013.

Dr. Simon Reif, health economist and head of the ZEW Project Group “Health Care Markets and Health Policy”, has been named thought leader of the year 2021 by Handelsblatt and the Boston Consulting Group. He is thus one of the people who, despite the COVID-19 crisis, have been using their ideas to actively drive transformation.

ZEW Junior Research Associate Dr. Maximilian Todtenhaupt has accepted a W3 professorship in economics with a focus on public finance at Leibniz University Hannover, where he will start on 1 September 2022. Until 2018, he was a researcher in the “Corporate Taxation and Public Finance” Department at ZEW Mannheim and obtained his PhD from the University of Mannheim.

Electricity from solar or wind power is increasingly substituting electricity from conventional coal and gas-fired power plants in Germany. This reduces both emissions and wholesale prices on the energy market. Both effects benefit not only Germany, but – via the transnational electricity market – also its neighbouring countries. However, the costs of promoting renewable energies are mainly borne by German consumers, as they pay the EEG surcharge levied on them.

This is the result of a study by ZEW Mannheim and the Potsdam Institute for Climate Impact Research (PIK) based on generation and wholesale market price data for ten Central European countries between 2015 and 2020.

In Germany, low-income households need more time on average to get to nursery, primary and secondary schools. Although the time difference to more affluent households is usually only a few minutes each way, this means a significant additional time burden over the course of a year.

The ZEW Indicator of Economic Sentiment for Germany decreased in the September 2021 survey, falling 13.9 points to a new reading of 26.5 points. Since May 2021, the indicator has dropped for the fourth consecutive time. The assessment of the economic situation in Germany improved in September 2021 again and currently stands at 31.9 points, 2.6 points higher than in August 2021. The situation indicator has continuously increased since February 2021, when it stood at minus 67.2 points.

The situation indicator has increased by 72.0 points since May 2021, while the expectation indicator has decreased by 57.9 points during the same period. The current reading of the ZEW Indicator of Economic Sentiment for Germany implies that over the next six months economic growth in Germany will only slightly be higher than its current reading.

The continuation of the Eurosystem’s government bond purchases is a controversial issue within the ECB Council. A study by ZEW Mannheim now shows for the first time that the polarisation within the Council corresponds to the public debt level of the individual members’ home countries. In their public statements, national central bank presidents from countries with high government debt tend to support the continuation of the ECB’s current bond purchase programmes. On the other hand, the representatives of low-debt countries are more sceptical and call for an early exit from the programmes.

With the start of the IAA Mobility Show, the most important German industrial sector and its problems are once again moving into the spotlight. Climate policy and the consequences of the pandemic pose major challenges for all manufacturers. This is reflected not least in the plans for mergers in this sector.

At the end of 2025, the spectrum usage rights in the bands at 800 MHz, 1,800 MHz and 2.6 GHz will expire. The Bundesnetzagentur (Federal Network Agency) has therefore sparked a discussion on how best to provide the freed-up spectrum for use from 2026 onwards in such a way as to ensure a functioning mobile radio market and optimal broadband coverage. For this purpose, the agency published a scenario paper on which ZEW President Professor Achim Wambach and Professor Vitali Gretschko, head of the Research Department “Market Design” at ZEW Mannheim, have provided their views.

Our publications are available to download in PDF format. PDF files can be viewed using, among others, Acrobat Reader, which you can download for free at https://acrobat. adobe. com/us/en/acrobat/pdf-reader. html

Robert Germeshausen, Sven Heim, and Ulrich J. Wagner
Support for Renewable Energy: The Case of Wind Power

Sabrina Genz, Terry Gregory, Markus Janser, Florian Lehmer, and Britta Matthes
How Do Workers Adjust When Firms Adopt New Technologies?

Dirk Czarnitzki and Kristof Van Criekingen
Information Leakage, Imitation, and the Patent System

Bastian Krieger and Vera Zipperer
Does Green Public Procurement Trigger Environmental Innovations?

Martin Lange
The Legacy of State Socialism on Attitudes Toward Immigration

Marius Berger and Sandra Gottschalk
Financing and Advising Early Stage Startups: The Effect of Angel Investor Subsidies

Jan Abrell and Mirjam Kosch
Cross-Country Spillovers of Renewable Energy Promotion – The Case of Germany

Gustav Fredriksson, Florian Landis, and Sebastian Rausch
Between- and Within-Country Distributional Impacts from Harmonizing Carbon Prices in the EU

Jessica Ordemann and Friedhelm Pfeiffer
The Evolution of Educational Wage Differentials for Women and Men, from 1996 to 2019

Gunther Glenk and Stefan Reichelstein
Intermittent Versus Dispatchable Power Sources: An Integrated Competitive Assessment

Jan Abrell, Sebastian Rausch, and Clemens Streitberger
The Economic and Climate Value of Flexibility in Green Energy Markets

Robert Clark, Decio Coviello, and Adriano De Leverano
Centralized Procurement and Delivery Times: Evidence from a Natural Experiment in Italy

Johannes Bersch, Enrico De Monte, Nadine Hahn, and Georg Licht
Industry and Productivity Dynamics in Germany

This issue contains a focus on Bundestagswahl with the following articles:

Claudia Neu, Lukas Riedel, and Holger Stichnoth
Erreichbarkeit von Bildungs-, Gesundheits- und kulturellen Einrichtungen (Accessibility to Educational, Health and Cultural Facilities)

Vitali Gretschko and Achim Wambach
Stellungnahme zu Grundsätzen und Szenarien für die Bereitstellung der Mobilfunkfrequenzen (Statement on Principles and Scenarios for the Provision of Mobile Radio Frequencies)

Johannes Schmitt, Gero Stenke, Josefine Diekhof, Bastian Krieger, Georg Licht, and Christian Rammer
Unternehmenskultur als Resilienzfaktor? Forschen und Entwickeln in der Pandemie (Corporate Culture as a Resilience Factor? Research and Development in the Pandemic)

Creation of a Representative Data Base of Young Firms in North Rhine-Westfalia

Drivers and Barriers for Innovation in the German SME sector

Improving Energy Efficiency in Low-Income Households: Empirical Evidence and Field Experiments

Proposals for Improving the Administration of the German R&D Tax Credit

Due to the ongoing COVID-19 pandemic, the following event details may be subject to change. The current status of the events can be found in the ZEW Events Calendar. If you have any questions, please don’t hesitate to contact our event team at event@zew.de.

Speaker: Natalia Fabra (Universidad Carlos III de Madrid, Spain)
Location of the event: Online

Speaker: Hosny Zoabi (The New Economic School, Moscow, Russia)
Location of the event: University of Mannheim and online

Speaker: Franziska Valder (KU Leuven, Belgium)
Location of the event: ZEW Mannheim

Speaker: Michael Katz (Haas School of Business, University of California, Berkeley, USA)
Location of the event: Online

Speaker: Philipp Ager (University of Mannheim)
Location of the event: University of Mannheim and online

Speaker: Po-Hsuan (Paul) Hsu (National Tsing Hua University, Hsinchu City, Taiwan)
Location of the event: Online

Speaker: Bastian Krieger (ZEW)
Location of the event: Online

Speaker: Emi Nakamura (University of California, Berkeley, USA)
Location of the event: Online

Location of the event: ZEW Mannheim

Speaker: Laurent A. Mathevet (New York University, USA)
Location of the event: Online

Location of the event: Online

Speakers: Claudia Buch (Deutsche Bundesbank, Frankfurt), Annamaria Lusardi (George Washington University, Washington, D. C., USA), David Leiser (Ben Gurion University of the Negev, Israel) and Martin Weber (University of Mannheim and ZEW)
Location of the event: ZEW Mannheim

Picture Credits: news article of 27.09.2021: EconPol, news article of 23.09.2021: JLL and ZEW, personalia article of 17.09.2021: privat, press release of 15.09.2021: stock.adobe.com/306677206, news article of 14.09.2021: iStock.com/BraunS, news article of 10.09.2021: Anna Logue Fotografie, press release of 06.09.2021: iStock.com/instamatics, press release of 01.09.2021: iStock.com/Easyturn
All further pictures: ©ZEW