Economic Development & Growth

The following article provides an overview of four projects that assess the effects of regulation and taxation as well as the pandemic’s impact on the German real estate market, using large-scale property price as well as survey data. The projects aim to provide answers to the following questions: Do subsidies make housing purchases more affordable? How do real estate transfer taxes affect house prices? How does rent regulation such as the Berlin rent cap affect the real estate market? And, which future trends in the housing market can be expected given the pandemic’s potentially long-lasting impacts on residential preferences?

In the new Policy Brief the authors present the results of two waves of quantitative online surveys of Ukrainian refugees in Germany. They were asked whether they plan to stay in Germany and whether they are already employed or plan to search for employment, as well as the factors that determine these. The second wave of the survey clarified the socio-demographic characteristics of refugees from Ukraine, the circumstances of their arrival and adaptation in Germany, and demonstrates the dynamics of changes in their plans and intentions.

Economic research has always emphasized the importance of a well-educated population for the level and dynamics of per capita income and other key economic variables. Foreseeable demographic changes – especially the stagnation or even decline of the active labor force – make investments in the quality of human capital particularly necessary.

This policy brief provides novel empirical evidence on the causal effect of increasing corporate taxes on firm investment. The study combines unique data on investment plans and their realizations of firms in the German industrial sector and data on more than 1,400 local tax changes in the specific system of business taxation in Germany. We show that firms reduce their investments if corporate taxes were increased. An increase of corporate tax rates to stabilize fiscal revenues would be especially costly during recessions. We conclude that fiscal policy should therefore avoid higher corporate taxation in times of economic crisis. Moreover, our results have implications for the op-timal design of fiscal federalism in Germany. Strong dependencies of municipalities on local business tax revenues should be avoided, as they can be very harmful during recessions.

The Ukraine war and geopolitical tensions pose major challenges for supply chains. Whereas shortages of microchips became a symbol of supply chain disruptions during Covid-19, a survey from June 2022 from the ifo Institute shows that over 74% of German manufacturing firms report production disruptions due to shortages of different types of inputs and raw materials. The production of key technologies that are necessary, for instance for the energy transition, often depends on imported raw materials. Therefore, it is important to evaluate Germany’s raw material dependencies at the product level to identify the risk of future supply chain disruptions. This paper identifies nine critical raw materials, which have a high degree of supplier concentration and are used in more than half of the key technologies. For these raw materials, we provide a detailed analysis on Germany’s dependency on imports.