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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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.
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Quick & New: Introducing the Payer of Last Resort
Emmanuel Saez and Gabriel Zucman call for more government action during the corona crisis. They argue that the government needs to act as a short-term payer of last resort to finance idle workers and business maintenance costs.
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Quick & New: New Zealand is moving past economic growth
While most countries base their annual budget on the economic benefits and the impact on growth and productivity, New Zealand takes another route.
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Video: Jens Südekum zu den Herausforderungen der Industriepolitik in Deutschland
40 Milliarden Euro werden in den drei deutschen Braunkohlerevieren investiert, um den Weggang der ehemaligen Industrie abzufedern. Jen Südekum (DICE) ist der Meinung, dass die Investitionen nicht in konsumptive Projekte fließen dürfen, sondern einen positiven Effekt für die Produktivität auf staatlicher und europäischer Ebene haben müssen.
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Quick & New: Dalia Marin – Europe in Need of State-Led Research
Crowding-In is the new Crowding-Out: Dalia Marin argues that Europe, and Germany in particular, should support companies with greater state-led technological investments.
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Eine gute öffentliche Infrastruktur ist das Fundament einer gerechten Gesellschaft
In einem Essay für Makronom argumentiert Tom Krebs, dass eine gut ausgebaute öffentliche Infrastruktur die Grundvoraussetzung für Egalität in der Gesellschaft darstellt.
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An Investment Agenda for Germany
The association of German employers (BDI) and the German trade unions (DGB) have called for an increase of investment spending of almost €500bn over the next ten years.
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A new paradigm for fiscal policy?
By Xavier Ragot, OFCE, Paris.
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From market fixing to market shaping: reframing growth policy
Mariana Mazzucato, Institute for Innovation and Public Purpose/ UCL, presented to the 3rd New Economic Paradigm Workshop.
