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.
LATEST NEWS
Debt for Germany – What good is the black-red-green financial package?
Good money - A question of political will? With Philippa Sigl-Glöckner and Stefan Kolev
Debt for Germany – What good is the black-red-green financial package?
Good money - A question of political will? With Philippa Sigl-Glöckner and Stefan Kolev
KNOWLEDGE BASE
REDEFINING
THE ROLE OF
THE STATE
The Challenge
Decaying infrastructure and a lack of investment in education and innovation expose the weaknesses of an overly market-driven paradigm.
What went wrong
Reducing the role of the state in the economy was seen as the best way to ensure high levels of growth.
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.
5 POSSIBLE WAYS THAT ARE DISCUSSED TO REDEFINE THE ROLE OF THE STATE
THE STEEP DECLINE IN NET PUBLIC INVESTMENT
The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies
Abiad, Furceri and Topalova find that increased public infrastructure investment raises output in both the short and long term, particularly during periods of economic weakness. With borrowing costs low, countries with infrastructure needs should boost spending.
Austerity: The history of a Dangerous Idea
Mark Blyth, Oxford University Press, 2013.
Quantifying the Macroeconomic and Fiscal Effects of Selected Infrastructure and Education Investments in Germany.
Tom Krebs and Martin Scheffel, University of Mannheim Working Paper, September 2016.
OTHER 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.
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.
Corona Crisis
CORONA CRISIS
The current Corona crisis is probably the worst economic crisis of the post-World War 2 era. Economists are working hard on mitigating the economic effects caused by COVID-19 to prevent a second Great Depression, the break-up of the Eurozone and the end of globalisation. We collect the most important contributions.