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The latest news, debates, proposals and developments on new economic thinking at a glance.
Governance for a modern industrial policy: The example of the Saarland Transformation Fund – Article
Jakob von Weizsäcker, Wirtschaftsdienst Zeitgespräch, Issue 8 (August edition)
This article is part of Revitalising industrial policy.
The transformation in Saarland is particularly challenging due to an energy-intensive economic structure and high industry concentration, especially in steel and automotive. The success of the transformation fund, which was set up in response to an exceptional emergency situation within the meaning of the debt brake, is to be ensured by five governance elements, including a responsibility partnership: (1) stricter control rights for the state parliament than in the core budget; (2) a clear separation of the transformation from other policy areas; (3) an increase in the investment ratio in the core budget to finance additional investments; (4) the establishment of the fund’s office in the Ministry of Finance as an additional point of contact for risk assessment of the project portfolio; and (5) constructive and critical support from an independent advisory board.
Climate finance policy: Initiative calls for green rule instead of debt brake – Article
Joachim Wille, Frankfurter Rundschau, 04.08.2025
The Potsdam Institute for Climate Impact Research (PIK) shows how the energy transition and sound public finances could be reconciled thanks to a ‘green-gold rule’.
Economic expert Truger: Now we need a crisis solidarity surcharge for the rich – Article
Achim Truger, Surplus Magazine, 05.08.2025
There is a huge gap in the federal budget from 2027 to 2029. A crisis solidarity surcharge for high incomes is needed.
Is AI killing graduate jobs? – Article (Paywall)
Clara Murray, Delphine Strauss, John Burn-Murdoch and Sarah Lim, Financial Times, 24.07.2025
Factors including economic uncertainty and offshoring may be more responsible for a decline in entry-level roles.
AI Should Help Fund Creative Labor – Commentary (Paywall)
Mariana Mazzucato and Fausto Gernone, Project Syndicate, 25.07.2025
Generative AI models are trained on publicly accessible creative content yet offer little to the artists, journalists, coders, and others who produce it. A levy on AI firms’ revenues could help fund the arts, promote open access, and ensure that human ingenuity doesn’t become collateral damage in the quest for profit.
How to Fight Climate Change Without America – Commentary
Jean Pisani-Ferry, Beatrice Weder di Mauro, and Jeromin Zettelmeyer, Project Syndicate, 22.07.2025
With the US retreating from multilateralism, governments must find ways to meet critical climate goals without American involvement. The path forward lies in forging mutually beneficial partnerships that align climate objectives with the unique needs of emerging markets and developing economies.
Report: Merz already considering new debt reform – Article
Lukas Kuite, Berliner Zeitung, 30.07.2025
According to a government official quoted by Bloomberg, Chancellor Merz is considering debt reform 2.0. This would be appropriate given the current situation.
Klingbeil’s double budget message – Article
Süddeutsche Zeitung, 30.07.2025
The black-red coalition presents its second budget. The focus is to be on investment and relief measures. However, more difficult times are ahead.
The EU’s budget is setting it up for geopolitical marginalisation – Opinion (Paywall)
Martin Sandbu, Financial Times, 28.07.2025
The good, the bad and the ugly of the bloc’s multiyear spending proposal.
Investors beware the dangers lurking in private credit – Article (Paywall)
Gillian Tett, Financial Times, 25.07.2025
For some observers, the rapid rise of this asset class invites unsettling historical comparisons.
The ECB’s Monetary-Policy Revolution – Commentary (Paywall)
Marcel Fratzscher, Project Syndicate, 28.07.2025
Central bankers today operate in a world shaped by increasingly frequent external shocks, from financial crises and geopolitical conflict to climate disasters. The European Central Bank’s new strategy recognizes this reality, allowing policymakers to consider economic and financial risks beyond inflation.
After Seville – Analysis
Daniela Gabor, Phenomenal World, 24.07.2025
The fourth UN Financing for Development conference, which concluded in Seville earlier this month, was a high-stakes meeting. The climate crisis is accelerating while climate commitments are weakening; official development assistance is shrinking while debt service is eviscerating poor countries’ education and health budgets.
Beyond Neoliberalism? – Analysis
Kate Mackenzie and Tim Sahay, Phenomenal World, 23.07.2025
Where market shaping policies were once dismissed with epithets like interventionism and “picking winners,” policy makers now talk openly about disciplining capital and industrial policy. At a conference in Cambridge, UK, at the end of May, academics, think tankers, policymakers, and journalists convened to contemplate this new world “Beyond Neoliberalism.”
‘We will remember Trump as an era of chaos’ – Interview (Paywall)
Nils Kreimeier, Stern, 20.07.2025
Princeton historian Harold James warns of the long-term damage the Trump era will cause the United States – and predicts a brilliant comeback for Europe. Germany in particular could attract a lot of capital from international investors.
These experts are tasked with reforming the debt brake – Article (Paywall)
Christian Reiermann, Spiegel, 24.07.2025
It is one of the most delicate tasks facing the coalition: reforming the debt brake. The SPD is relying on reformers to achieve this, while the CDU/CSU is countering with hardliners.
150 billion gap – Klingbeil’s financial woes are growing – Article (Paywall)
Martin Greive, Jan Hildebrand, Handelsblatt, 24.07.2025
According to information from Handelsblatt, the budget deficit will have grown by tens of billions by 2029. At the same time, Klingbeil will become the one trillion euro debt minister.
Tax on AI and crypto could fund climate action, says former Paris accords envoy – Article
Fiona Harvey, The Guardian, 17.07.2025
Laurence Tubiana urges governments to consider levies on energy-hungry technology.
European Democracy Needs Its Middle Class Back – Commentary (Paywall)
Bertrand Badré and Eric Hazan, Project Syndicate, 17.07.2025
The middle class forms the core of our societies and the scaffolding that keeps our democracies standing. Rather than treat it as the collateral damage of inevitable progress, Europe’s leaders should pursue a strategy to rebuild it, financed by European sovereign bonds.
How economics teaching became the Aeroflot of ideas – Opinion (Paywall)
Ha-Joon Chang, Financial Times, 24.07.2025
The discipline is failing students by ignoring the biggest social, political and ecological challenges facing the world today.
Will the baby boomers now have to pay? – Interview (Paywall)
Interview: Carla Neuhaus and Mark Schieritz, ZEIT Nr. 31/2025, 23.07.2025
Marcel Fratzscher from the German Institute for Economic Research wants to tax the baby boomers to help pensioners living in poverty. Pension expert Bert Rürup says: That is unfair and will not work.
In the customs dispute with the US, Europe is stronger than it seems – Guest article (Paywall)
Jürgen Matthes and Samina Sultan, Handelsblatt, 15.07.2025
The US is dependent on many EU goods. Germany in particular should not overestimate its dependence on the US market, warn Jürgen Matthes and Samina Sultan.
We Warned About the First China Shock. The Next One Will Be Worse. – Guest Essay
David Autor and Gordon Hanson, The New York Times, 14.07.2025
The Trump administration is fighting the last war while China marches toward dominating the industries of the future.
Discussion about DIW proposal: A “boomer soli” for the pension fund? Article
16.07.2025, tagesschau.de
The baby boomer generation is retiring – a financial feat for the pension fund. Economic researchers are now proposing that richer pensioners pay a “solidarity contribution” for poorer ones. The proposal has been widely criticised. But there is also praise.
German government announces opposition to planned EU budget – Article
ZEIT, 17.07.2025
The EU wants to significantly increase its budget – and counter-finance it with new levies for large corporations. Germany considers the proposal ‘unacceptable’.
Bundesbank sees German economic recovery at risk, IMK does not – Article
Spiegel, 16.07.2025
Donald Trump threatens the EU with 30 per cent tariffs from August. There are conflicting opinions on the possible consequences: The Bundesbank is worried about Germany’s economy, economists at the IMK believe the risk is limited.
Back to oil – Article
Heike Buchter, ZEIT, 14.07.2025
Under President Joe Biden, the USA had greatly expanded renewables. That is now changing: Donald Trump is creating lucrative advantages for the oil and gas industry.
A Moving History – Essay
Ian Goldin, IMF Finance & Development Magazine June 2025
Migration has propelled human progress for hundreds of thousands of years.
Get more out of every Euro spent – Guest article (Paywall)
Lars Klingbeil and Éric Lombard, Handelsblatt, 15.07.2025
Europe needs more investment and less bureaucracy to survive in global competition, write the finance ministers of France and Germany, Lars Klingbeil and Éric Lombard, and present concrete reform proposals.
These debt rules are a danger for Europe – Commentary (Paywall)
Martin Greive, Handelsblatt, 16.07.2025
Instead of having a comprehensible set of rules, the EU Commission has created a shadowy realm of financial policy. The rules are a black box, as the example of Germany shows.
Make America affordable again – Opinion (Paywall)
Rana Foroohar, Financial Times, 13.07.2025
That’s the main lesson to take from New York populist Zohran Mamdani.
Two centuries of unequal exchanges – Blog
Thomas Piketty, Le Monde, 15.07.2025
How should we analyze the new wave of trade tensions that gripped the world in 2025? To better understand the issues at stake, the World Inequality Lab recently published a historical study on global trade and financial imbalances since 1800, titled « Unequal Exchange and North-South Relations: Evidence from Global Trade Flows and the World Balance of Payments 1800-2025. »
Tax on ultra-rich: ‘France has the opportunity to lead the way,’ say Nobel Prize-winning economists – OpEd
Daron Acemoglu, George Akerlof, Abhijit Banerjee, Esther Duflo, Simon Johnson, Paul Krugman, Joseph Stiglitz, Le Monde, 07.07.2025
As public deficits balloon and extreme wealth explode, creating a minimum tax on the assets of billionaires should be a priority, argue seven Nobel Prize-winning economists in an op-ed for Le Monde.
When Ideology Trumps Economic Interests – Commentary
Dani Rodrik, Project Syndicate, 09.07.2025
There can be little doubt that many Republican lawmakers voted against their constituents’ economic interests in supporting US President Donald Trump’s “One Big Beautiful Bill.” That outcome holds an important lesson for students of political economy, who typically assume that interests are self-evident.
The End of America’s Exorbitant Privilege – Commentary
Desmond Lachman, Project Syndicate, 07.07.2025
Since his return to office, US President Donald Trump has been systematically destroying markets’ faith in the dollar and the US economy. If he refuses to heed their warnings, as seems likely, the US should brace for a dollar and bond-market crisis in the run-up to next year’s midterm elections.
Every second German household owns more than 100,000 euros – Article
Wealth in Germany is very unevenly distributed. However, analysed figures from the German Bundesbank show that the middle class also has significant reserves.
Spiegel, 09.07.2025
“Trump has gone too far this time” – Interview
Interview: Marcus Gatzke, ZEIT, 09.07.2025
Trump’s tax giveaways for the rich will hurt him, says Nobel Prize winner Joseph Stiglitz. But the situation is not hopeless: the USA could become fairer.
BRICS in 2025 – Analysis
Tim Sahay and Kate Mackenzie, Phenomenal World, 05.07.2025
Two energy systems and development models compete for primacy within the group.
This is how Klingbeil wants to compete with Merz in foreign policy – Article
Martin Greive, Handelsblatt, 09.07.2025
SPD leader and Federal Finance Minister Klingbeil is massively expanding the Vice-Chancellor’s Office. And, according to Handelsblatt, is appointing a foreign policy team for the first time.
The Limits of Limiting Democracy – Blog
Max Krahé, Michael W. Müller, Verfassungsblog, 09.07.2025
Constitutional Democracy and the Future of Fiscal Rules.
OUR MAIN TOPICS
New Paradigm
NEW PARADIGM
After decades of overly naive market belief, we urgently need new answers to the great challenges of our time. More so, we need a whole new paradigm to guide us. We collect everything about the people and the community who are dealing with the question of a new paradigm and who analyze the historical and present impact of paradigms and narratives – whether in new contributions, performances, books and events.
Redefining
the role of
the state
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.
Remaking
finance
REMAKING
FINANCE
More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.
Greening
prosperity
GREENING
PROSPERITY
During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.
Reducing
inequality
REDUCING
INEQUALITY
The rising gap between rich and poor has become a threat to social cohesion in most rich countries. To reverse this trend it will be crucial to better understand the importance of different drivers of income and wealth inequality.
Innovation Lab
INNOVATION LAB
Do we need a whole new understanding of economic growth? What would be a real alternative? How viable are alternatives to GDP when it comes to measuring prosperity? These and other more fundamental challenges are what this section is about.
Globalization
for all
GLOBALIZATION
FOR ALL
After three decades of poorly managed integration, globalization is threatened by social discontent and the rise of populist forces. A new paradigm will need better ways not only to compensate the groups that have lost, but to distribute the gains more broadly from the start.
Europe
beyond markets
EUROPE
BEYOND MARKETS
The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.