Halle Institute for Economic Research
Between Energy Crisis and AI Boom The summer forecast of the Halle Institute for Economic Research (IWH) assumes that the Gulf conflict eases and energy prices do not rise…
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Research Articles
Research Articles Explore cutting-edge research based on CompNet’s micro-aggregated firm-level data and related analytical tools. These articles cover empirical and theoretical…
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The German Energy Crisis: A TENK-based Fiscal Policy Analysis
Alexandra Gutsch, Christoph Schult
IWH Discussion Papers,
No. 1,
2025
Abstract
We study the aggregate, distributional, and welfare effects of fiscal policy responses to Germany’s energy crisis arising in 2022 using a novel ten-agent New Keynesian (TENK) model. The crisis, compounded by the COVID-19 pandemic, led to sharp price increases and significant consumption disparities. Our model, calibrated to Germany’s income and consumption distribution, evaluates key policy interventions. We find that non-targeted transfers had the largest short-term aggregate impact, while targeted transfers for lower income households were more cost-effective. The energy cost brake and reductions in gas and oil taxes have shown very little effect, but were comparatively cost-effective under the assumption of exogenous prices. Our results highlight how targeted fiscal measures can address distributional effects and stabilize consumption during crises.
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16.01.2025 • 3/2025
Medium-term projection for the German economy and scenarios for achieving the targets of the Climate Protection Law
The potential growth rate of the German economy is declining. According to the medium-term projection of the Halle Institute for Economic Research (IWH), potential output is likely to increase by an annual average of just 0.3% in the medium term (2023-2029). The target of climate neutrality by 2045 is likely to be missed by a wide margin without further emission-reducing measures. It could be achieved by means of higher CO₂ prices at significantly lower macroeconomic costs than by means of non-market-based regulatory measures.
Oliver Holtemöller
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East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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Department Profiles
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1st FINPRO - Finance and Productivity Conference
1st FINPRO - Finance and Productivity Conference The Great Financial Crisis of 2007/2008 still casts a shadow on many developed economies in terms of real outcomes, such as…
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Macro data interactive
Macro data interactive This service provides time series from official publications (Statistisches Bundesamt [German Federal Statistical Office], Arbeitskreis Volkswirtschaftliche…
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Financial Stability
Financial Systems: The Anatomy of the Market Economy How the financial system is constructed, how it works, how to keep it fit and what good a bit of chocolate can do. Dossier In…
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Stock of fixed assets
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