EconPol Policy Briefs

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Intentions to Stay and Employment Prospects of Refugees from Ukraine

Tetyana Panchenko, Panu Poutvaara

In the new Policy Brief the authors present the results of two waves of quantitative online surveys of Ukrainian refugees in Germany. They were asked whether they plan to stay in Germany and whether they are already employed or plan to search for employment, as well as the factors that determine these. The second wave of the survey clarified the socio-demographic characteristics of refugees from Ukraine, the circumstances of their arrival and adaptation in Germany, and demonstrates the dynamics of changes in their plans and intentions.

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Reactions to Supply Chain Disruptions: Evidence from German Firms

Cevat Giray Aksoy, Andreas Baur, Lisandra Flach, Beata Javorcik

Since the outbreak of the Covid-19 pandemic, the configuration of international supply chains has received increased public attention. Pandemic-related disruptions in production and transportation have led to questions about the reliability of international production networks. Moreover, the war in Ukraine and the associated sanctions against Russia have cast a new light on the geopolitical significance of economic interdependencies with autocratic regimes. How do firms react to these developments, and have they already adjusted their sourcing strategies? In this policy brief, we present the results from a representative survey of more than 4,000 firms in Germany, providing insights into how companies have responded to supply chain disruptions and which priorities they are setting for the future.

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Corporate Taxes Reduce Investment: New Evidence from Germany

Sebastian Link, Manuel Menkhoff, Andreas Peichl, Paul Schüle

This policy brief provides novel empirical evidence on the causal effect of increasing corporate taxes on firm investment. The study combines unique data on investment plans and their realizations of firms in the German industrial sector and data on more than 1,400 local tax changes in the specific system of business taxation in Germany. We show that firms reduce their investments if corporate taxes were increased. An increase of corporate tax rates to stabilize fiscal revenues would be especially costly during recessions. We conclude that fiscal policy should therefore avoid higher corporate taxation in times of economic crisis. Moreover, our results have implications for the op-timal design of fiscal federalism in Germany. Strong dependencies of municipalities on local business tax revenues should be avoided, as they can be very harmful during recessions.

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How Dependent Is Germany on Raw Material Imports? An Analysis of Inputs to Produce Key Technologies

Lisandra Flach, Isabella Gourevich, Leif Grandum, Lisa Scheckenhofer, Feodora Teti

The Ukraine war and geopolitical tensions pose major challenges for supply chains. Whereas shortages of microchips became a symbol of supply chain disruptions during Covid-19, a survey from June 2022 from the ifo Institute shows that over 74% of German manufacturing firms report production disruptions due to shortages of different types of inputs and raw materials. The production of key technologies that are necessary, for instance for the energy transition, often depends on imported raw materials. Therefore, it is important to evaluate Germany’s raw material dependencies at the product level to identify the risk of future supply chain disruptions. This paper identifies nine critical raw materials, which have a high degree of supplier concentration and are used in more than half of the key technologies. For these raw materials, we provide a detailed analysis on Germany’s dependency on imports.

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Reforming Economic Governance in the Eurozone: Shifting Spending Instead of Expanding Debt Margins

Clemens Fuest

In February 2020, the European Commission announced that it would present a plan for reforming the economic governance of the Eurozone, including the rules for public debt. The project was postponed by the outbreak of the corona pandemic, but now the reform is to come. There is a widespread demand to expand debt leeway, for example for climate protection spending. In view of the already very high national debt and rising inflation, this is the wrong way to go. Fiscal policy coordination should focus more on expenditure reallocations and thus on improving the quality, not the quantity of public spending. What is needed is a modified handling of the existing rules, not a change in the rules themselves.

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