Volume 5, Issue 1

This paper presents a case study on commissioned economic research in Germany. We find deplorable methodological and empirical shortcomings in a prominent study by Munich’s ifo-Institute, on aspects of horizontal fiscal revenue sharing between German states. We suspect that this may not be an exceptional case but may point out problems of quality control in economic consultancy as a whole. Therefore, we suggest establishing a certified referee system in order to improve research quality.

The question to what extent national regulations should compete or be harmonised within the European Union is important for the further process of integration. The past experiences of economically and politically integrated areas are neglected in this discussion. On the basis of an evolutionary concept of institutional competition this paper outlines how regulatory competition between the ‘Bundesstaaten’ of the German Empire of 1871 - in its political structure comparable with the European Union - and between the Empire and foreign countries performed up to First World War. The special case study deals with the regulation of food of wine, beer and meat, but the article tries to work out general hypotheses about institutional competition between different jurisdictions. Especially the limits of regulatory competition are brought out.

Recent reforms of the Swiss health care system to introduce regulated competition have raised expectations about the possible combination of more efficient services, while at same time maintaining or even increasing the level of solidarity in health care systems. In this article we examine expected behavioral changes of the market actors, the way incentives for market actors have been changed and analyze the way market actors in fact changed their behavior. We conclude that so far only some of the targets of the reforms have been met. For a reasonable assessment of the Swiss experience in regulating competition in health care it is paramount to distinguish expected effects from actual effects.

Can the aging problem be solved by a higher birth rate? While the popular notion - ‘‘if we have too many elderly we need more children in order to compensate for this” - seems plausible, the results of economic theory are ambiguous at best. This paper employs a quantitative macroeconomic simulation model for Germany and leads to a more subtle view, stressing the importance of human capital formation for long-term economic growth in this context. Moreover, it takes a very long transitional period until a higher fertility rate results in a larger and bettereducated labour force that contributes to social security. Therefore, reforms of the social security system still have the highest priority because this is the only way to solve the problems of an aging baby-boomer generation in the short and medium term - meaning the time until the baby boomers will retire.

The paper starts with a critical assessment of attempts to measure sustainability. Moreover, incentives for the present generation to follow a sustainable path are a key issue. Sustainability is threatened by discounting and by the open access structure of the relationship between present and future generations. On the other hand, there are economic causes for optimism. Particularly if the present generation corrects market failures, positive intertemporal externalities are generated. In addition to this “main stream” economic reasoning, the paper investigates whether sustainability is more likely if decision makers are not guided by the rules of homo oeconomicus.