Volume 58, Issue 1

In the political debate, calls for regulation of energy efficiency are usually based on environmental or resource economic arguments. This paper analyses the case for energy efficiency regulation as a policy to curb excessive resource consumption, to protect the climate and to achieve energy security. The economic rationale for regulation on these grounds is market failure due to externalities and asymmetric information as well as intergenerational distributive justice. We show, however, that most instruments used in energy efficiency regulation, such as standards, subsidies and white certificates, do not meet the criterion of cost efficiency. Tradable emission permits and specific energy taxes are more effective in achieving the policy goals and less costly. Energy efficiency is shown to be a result, not a means of sound environmental and resource policy.

Within the last years, the development of the pension value (Rentenwert), which determines the size of public pension benefits in the German public pension system, was strongly affected by discretional changes in the method of its calculation. The aim of the present study is to shed light on the influence of these changes. To do so, we calculate the pension value for a number of hypothetical scenarios on an ex-post basis and compare results with each other. The key issue of our analysis is to quantify the isolated effects of the components included in the 2004 Pension Reform Act. We provide results for both East and West Germany.

This paper investigates the impact of an Allowance for Corporate Equity (ACE) on the expected tax revenues and on the international tax competition. Beginning with an analysis of the relation between the rate of return on equity and the interest rate on the capital market, this paper figures out some effects which cause surprisingly low net assets used to calculate the ACE. This yields to a strong impact on the financial structure of multicorporate enterprises although there is only a moderate decline in tax revenues. Focusing profit shifting via transfer prices, the ACE has no positive effect. Only a cut of the corporate tax rate is useful in this context. The relevance of these results is additionally affirmed by using the statistical data published by the “Deutsche Bundesbank”, the central bank of Germany, which includes an aggregated corporate balance sheet. All in all, the ACE can be seen as an alternative to the new German thin capitalization rules applied in 2008 (“Zinsschranke”). Additionally, the low tax revenue losses constitute a new advantage for the ACE as a blueprint for corporate tax reforms. This is also interesting because an ACE could reduce the negative effects on the financial structure of firms which accompanies the implementation of a low withholding tax on interests.

Microsimulation models (MSM) and Computable General Equilibrium models (CGE) have both been widely used in policy analysis. The combination of these two model types allows the utilization of the advantages of both types. The aim of this paper is to describe the state-of-the-art in simulation modeling and to demonstrate the benefits of linking both model types modeling using a flat tax reform proposal for Germany