The government intervenes in the market mechanism through a lot of policy instruments in order to achieve various economic objectives. However, for policy makers, it is important to know whether the originally intended objectives are also achieved. Scientific methods can make a significant contribution to this. These are necessary to establish a clear connection between a policy instrument and its effect. Against this background, the Centre for Evidence-based Policy Advice (IWH-CEP) at the IWH was founded.

Research and Policy Advice

Research and policy advice are organized via the different research groups of the IWH. This organizational structure allows to assess policy changes from both a macro and micro perspective and cover different sectors of the economy.

To gain a better understanding of structural changes and economic growth, a first focus is set on the evaluation of industrial policy schemes, for example, the "Joint Task of 'Improving the Regional Economic Structure'" (which is the most important regional policy support scheme in Germany) is being evaluated in the Federal State of Saxony-Anhalt. The objective of the project is to use different evaluation techniques to assess the impact of policy support measures. The project is carried out under the responsibility of the IWH Research Group "Evaluation of Subsidy Programmes".

A second key area includes analyses on regulatory reforms and effects. Especially having in mind that after the recent financial crisis, a re-regulation of the financial system took place, it is of utmost importance to evaluate the effectiveness of the reforms as well as to assess whether there are unintended side-effects. In the context of the project The Political Economy of the European Banking Union, researchers in the financial markets department study how the directives underlying the European Banking Union are implemented across member states as well as whether the new regulatory framework has implications for banking stability and financial intermediation.

Set-up of a Network

IWH-CEP is part of the initiative for "Evidence-based Economic Policy", hosted by the Verein für Socialpolitik (German Economic Association). Being part of this initiative enhances IWH-CEP's visibility within the scientific and political community.

Set-up and Maintenance of Databases

The major challenge in the analysis of effects of government interventions and regulatory changes  lies in the accessibility of administrative data. IWH-CEP advances into this direction by building up databases that can be shared with other researchers.

Therefore, the IWH Subsidy Database is set up, maintained and completed according to the (current) specialisation in the analysis of effects of industrial policy support schemes. Information about the funded projects alone is not sufficient to conduct causal analyses – corporate data provieded by official and commercial statistics must be added; this is organised using record linkage techniques. This task is carried out at the IWH Research Data Centre.

Additionally, the financial market department has set up the website International Banking Library, which is a web-based platform for the exchange of research outcomes on cross-border banking. It provides access to data sources, academic research on cross-border banking, both theoretical and empirical, as well as information on regulatory initiatives. Thus, the website provides researchers and policymakers with a comprehensive overview of available data to conduct policy evaluation and the current stance of the literature on regulation and supervision of financial markets. The quarterly newsletter summarizes recent developments and is appreciateted by both academics and central bankers.

The IWH-CEP organises the annual transfer conference "From Transition to European Integration". Under a current topic, the event connects representatives from politics, ministries, authorities, associations and companies with scientists from the IWH and its partner institutions. The opening speech is given by a prominent politician. After scientific lectures and discussions, a panel discussion concludes the one-day conference. The event is designed for the dissemination of IWH's research findings among political decision-makers and administrative professionals. There is also media coverage.