Redefining the role of the state
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
The State
New Paradigm Knowledge Base
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The Challenge
Decaying infrastructure and a lack of investment in education and innovation expose the weaknesses of an overly market-driven paradigm
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What went wrong?
Reducing the role of the state in the economy was seen as the best way to ensure high levels of growth.
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New Economy in Progress
The challenges of our time require us to rethink the role of the state and the need for a more active fiscal policy.
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CHART: The steep decline in net public investment
Total capital expenditure minus the cost of replacing worn-out depreciation of assets.
5 possible ways that are discussed to redefine the role of the state
- Boost investment in education, healthcare, infrastructure. This could more than pay for itself.
- Use fiscal policy as a tool for macroeconomic stabilization and to boost economic activity
- Use of state as an entrepreneurial actor, investing in and deploying new technologies.
- Central banks could distribute money directly to citizens in an attempt to boost consumer confidence and consumption.
- Demonstrate the indispensability of the state by tackling monopolistic capitalism.
More News on The State
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A Debt Brake for the 21st Century
In a newly published piece on Makronom, Philippa Sigl-Glöckner lays out her formula for a reform of the German debt brake.
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Mariana Mazzucato & Rainer Kattel in the FAZ: “The State must do better”
In a guest article for the Frankfurter Allgemeine Sonntagszeitung, Mariana Mazzucato and Rainer Kattel plead not for more or less state, but for a better one.
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New Economy Working Paper – Challenge-driven economic policy – A new framework for Germany
A new study by Mariana Mazzucato and her team from the Institute for Innovation and Public Purpose at University College London
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New Economy Working Paper out – A new paradigm for Germany’s fiscal policy after Corona
A new study by Michael Hüther (IW Köln) and Jens Südekum (DICE) looks into the past and the future of the German debt brake.
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Video – New Economy Short Cut on the US Election Outcome
The US-citizens voted in what is deemed to be one of the most important elections of western democracies. We discussed the (preliminary) result with Katharina Pistor and Rüdiger Bachmann at November 4 from 3pm CET onwards.
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Highlights – A Talk between Joseph E. Stiglitz and Olaf Scholz
We summarize the talk at the 7th New Paradigm Workshop between Nobel laureate Joseph Stiglitz and Federal Finance Minister Olaf Scholz from the SPD.
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BMWi-Beirat empfiehlt Erhöhung der Mittel für öffentliche Investitionen
Ein Gutachten des Wissenschaftlichen Beirats beim Bundesministerium für Wirtschaft und Energie stellt fest, dass in Deutschland schon seit vielen Jahrzehnten deutlich zu wenig in die öffentliche Infrastruktur investiert wird.
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Toward a New Fiscal Constitution
Mariana Mazzucato and Robert Skidelsky call for a new and mission-oriented fiscal constitution. They advocate for new indicators and the implementation of Job Guarantee Programmes.
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New Economy Short Cuts with Kristian Blickle (New York Fed)
Kristian Blickle will present a new version of his working paper "Pandemics Change Cities: Municipal Spending and Voter Extremism in Germany, 1918-1933".
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New Economy Short Cuts with Sebastian Dullien
Sebastian Dullien (IMK) gave an assessment of the impact of the economic stimulus package at the start of our new format "New Economy Short Cuts". The recording is available here.
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GroKo-Paket bleibt hinter Möglichkeiten zurück
So gut das Konjunkturpaket der Bundesregierung wirken mag – mit der Summe hätte mehr erreicht werden können. Von Sebastian Dullien
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The way out of the crisis – all news about a possible recovery plan
The German government has decided on an economic stimulus package of 130€ billion. Achim Truger and Michael Hüther evaluated individual measures in advance. Laurence Tubiana and Emmanuel Guerin insist on the importance of the Green Deal for reconstruction.
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Simon’s Blog: America Is Having an Unemployment Apocalypse. Europe Chose Not to.
A trans-Atlantic chasm has opened up on pandemic labor policy. We’ll soon know which side got it right.
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Romer & Garber: How to prevent the economy from dying?
The corona-pandemic has emerged from a health crisis into an economic crisis with looming supply and demand shocks. Nobel prize winner Paul Romer and Alan Garber from Harvard University have laid out a plan to deal with the crisis.
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Peter Bofinger: The time for MMT is now
The corona-crisis calls for a "whatever it takes" response on a fiscal level. Peter Bofinger argues that the Modern Monetary Theory gives theoretical justification for such an answer.
