Volume 70, Issue 2

In this paper, we use a microsimulation model to examine the labor supply implications of switching from joint taxation (“Ehegattensplitting”) to individual taxation. We show that the switch to individual taxation would increase labor supply by more than half a million full-time equivalents. However, such a reform also leads to financial losses for some groups of the population, which should be taken into account by economic policy makers.

Germany was already undergoing an ambitious energy transformation process when the corona pandemic hit in 2020. The German government reacted both quickly and decisively by initiating a huge rescue package to stabilize firms and employment. Besides immediate economic aid, the stimulus programme implemented in June 2020 contains more than 40 Billion Euro to foster both the green and the digital transformation. However, to achieve carbon neutrality effectively and efficiently market mechanisms allowing individuals and firms to internalize the environmental costs of their consumption and production behaviour are key. Therefore, in addition to the EU ETS, in 2021 Germany introduced a national carbon pricing scheme for the heating and transport sector. Certainly, unilateral European or national initiatives will not suffice to accomplish the goals of the Paris Agreement. Therefore, striving for joint global action is equally crucial both to combat the Corona-virus and to limit global warming.

Both fear of coronavirus infection and public measures to combat the pandemic are leading to a severe economic crisis. In order to cope with this crisis, many expect the state to act strong. Therefore, governments across the world have pledged billions of Euros for extensive recovery programs. But how “green” should these recovery programs be? There may be a certain window of opportunity to be used to set a clear focus on climate protection through substantial government investments in recovery. However, the “pandemic state”, which is showing itself to be powerful and resolute, ultimately does not provide a governmental role model for climate protection.

European governments face a two-fold challenge: they need to mitigate the negative consequences of the Corona pandemic and meet the increased climate protection requirements imposed on them by the tightening of targets through the European Green Deal. This raises the question to which extent political measures can serve both economic recovery and climate protection. By prioritising urgent public investment to address infrastructure deficits and smart policy instruments to incentivise climate-friendly action the German government enables the private sector to recover and develop sustainable business models.

In its country-specific recommendations for Germany, the European Commission regularly calls for reform in the area of regulated professions. These reform demands focus in particular on the business-related services provided by lawyers, tax advisors, auditors, architects or civil engineers. In doing so, the Commission pursues the thesis that the protection of similar general interests in the case of the domestic regulatory approach with binding professional access rules and a mandatory chamber system is accompanied by a comparatively high regulatory intensity and unnecessarily restricts competition. The Commission bases this assumption on different direct and indirect regulatory and competition indicators. This paper provides an overview of the strengths and weaknesses of these indicators and concludes that these do not allow for a robust conclusion on below-average competition intensity in professional services in Germany.

In crisis times a stable financial system is the basis to stimulate economic growth. In the bank-centered Chinese financial system mainly banks provide additional capital to the economy. According to the International Monetary Fund, the Chinese banking system represents one of the key weak spots of global financial stability. Do Chinese banks mitigate the negative consequences of the Covid-19 crisis or do they increase the risks? Based on the strengths and weaknesses of the Chinese banking system, I discuss the relevance of China for global economic growth. In summary, Chinese banks secure China’s short-term growth and lead the global economy back on the growth track. In the long run, the stability of the financial system depends on China’s ability to shape a sustainable financial system based on even more extensive reforms.