The Macroeconomic Policy Institute (IMK)

The Macroeconomic Policy Institute (IMK) is an independent academic institute within the Hans-Böckler-Foundation, a non-profit organisation fostering co-determination and promoting research and academic study. The Foundation is linked to the German Confederation of Trade Unions (DGB).

The IMK was founded in 2005 to strengthen the macroeconomic perspective both in economic research and in the economic policy debate. The IMK analyses business cycle developments and conducts economic policy research, notably on fiscal and monetary policy, labour markets, income distribution and financial markets. The Institute seeks to address the challenges facing macroeconomics and economic policy in the wake of the global financial crisis.

Working Paper 168

The golden rule of public investment – a necessary and sufficient reform of the EU fiscal framework?

The working paper discusses the introduction of a Golden rule for public investment in the EU. How should public investment be defined? Would a Golden Rule have prevented the austerity crisis? Would it leave sufficient fiscal leeway for expansionary fiscal policy in the current situation?

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Ungleichheit und der “New Deal”

Dieses englische Arbeitspapier beschäftigt sich mit Ungleichverteilung und Wirtschaftspolitik in den 1930er Jahren (New Deal). Das Hauptresultat ist, basierend auf der Analyse historischer Dokumente von Präsident Roosevelt, dass der New Deal Ungleichverteilung nicht ausreichend berücksichtigt hat.

zum Working Paper (pdf)

Bringing The IMF Into The Eurozone Crisis Was Political Bankruptcy

It was wrong from the start. Going on the incorrect assumption that the Eurozone crisis could only be overcome with the help of the crisis-proven IMF, it was the German government above all that insisted on embedding the Fund as an equal partner in the Troika meant to draw up and monitor the rescue programme for Greece.
Article on socialeurope.eu April 7th 2016.

to social europe

Inequality and Growth in Neo-Kaleckian and Cambridge Growth Theory

Tom Palley shows that inequality per se does not impact growth through macroeconomic channels. Instead, both growth and inequality are impacted by changes in the underlying forms and pattern of income payments.

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IMK Working Paper 166

Inequality and the New Deal

This working paper addresses the problem of income and wealth inequality as well as economic policy (New Deal) during the 1930s. The main finding, based on historical documents of President Roosevelt, is that inequality was not the main policy issue at that time.

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History, analysis and the way forward

EMU unemployment insurance

Presentation at the European parliament by IMK senior research fellow Laszlo Andor on the advantages of and obstacles to a European unemployment insurance scheme.

to the presentation (pdf)
to the conference website


IMK Working Paper 163

Extensive versus intensive margin over the business cycle: New evidence for Germany and the United States

This analysis shows that in general over the business cycle the intensive margin of labour adjustment (i.e. fluctuations in hours worked per employee) is more important in Germany than in the US. During the Great Recession and afterwards the intensive margin dominates labour adjustment in Germany.

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IMK Report 107e

Financial Market Stability in Times of unconventional Monetary Policy

The unconventional monetary policy of the ECB contains risks for financial market stability. A more expansionary fiscal policy will help to limit those risks. What is also needed is an increased vigilance of macroprudential regulation with regard to shadow banks.

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IMK Report 109e

German labour costs have risen only moderately

The adjustment process in the European crisis countries continued in 2014. Wages in Germany should grow at an above average rate for several years to support the adjustment process in the European crisis countries.

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IAGS 2016 Report

Give Recovery a chance

The crisis in Europe drags on. The recovery is fragile and deflationary pressures have not been overcome. There is a risk of longer-term damage if Europe does not lastingly boost public investment. This is one of the conclusions of the fourth independent Annual Growth Survey.

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IMK Working Paper 158

Governement Spending Composition, Aggregate Demand, Growth and Distribution

A new IMK Working paper by Daniele Tavani and Luca Zamparelli studies the impact of public investment on long-run growth in a demand-driven model.

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IMK Study 43

What causes housing bubbles? A theoretical and empirical inquiry

The study analyses the causes of housing price bubbles in industrialized countries, with a focus on the role of lax monetary policy versus financial innovation. Theoretical models cannot clearly answer this question, although a number do assign a role to financial innovation. Our case studies of selected countries point to changes in regulatory settings as important bubble contributors, and our regression results also stress the role of financial market developments.

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Quantitative easing with bite

Presentation by Andrew Watt at the Austrian National Bank conference on EMU reform, proposing monetary financing of public investment in the euro area.

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The Dialectics Of European Integration – A New Push For A Federal EMU?

Crisis-induced pessimism notwithstanding, European voters want an effective EU. Andrew Watt argues that the way to achieve this is to integrate economic policymaking of the countries sharing the euro, not by following an illusory path of renationalisation.

to the blog

How A Sovereign Insolvency Regime Would Polarise The Eurozone

A sovereign insolvency regime is likely to have serious side effects: it makes governments dependent on the whims of financial markets, is likely to increase the economic and financial polarization in Europe and would further strengthen Germany’s hegemony, writes Fabian Lindner on Social Europe.

to the blog

Can Greece invest its way out of the crisis?

Greece could surely use some economic growth - badly. But how? An evaluation of more than a hundred studies has revealed that public investment, even on credit, may just hold the key to long-term success. Article on dw.com 2015/08/05.

to the article

Photo: Peter Himsel


Investment-led Growth, Not More Cuts, Is The Only Way For Greece

The agreement reached in Brussels between EU governments and Greece came only with a huge loss of mutual trust. It remains to be seen whether the deal in these circumstances will win majority political support. Economically, it would at least offer a small opportunity for a recovery in the Greek economy. Statement from Gustav Horn on socialeurope.eu on 2015/07/15.

to the statement on socialeurope

Photo: dpa / Gregor Fischer


Greece's Future in the European Union

Invited by the IMK and the HUMBOLDT-VIADRINA Governance Platform, on June 8th Greek finance minister Yanis Varoufakis talked about Greece's future in the European Union. Here you can watch the video of the event (Yanis Varoufakis' speech is in English, the following debate mainly in German).

Watch the video

Photo: Horst Wagner

European Dialogue 2015

Paul Krugman on inequality and austerity

At the European Dialogue 2015 Nobel prize laureate Paul Krugman talked on inequality and Europe's failed economic policy. The event was organized by the Hans-Böckler-Foundation and the European Trade Union Institute (ETUI).

To the video


Call for Papers

FMM Conference: The Spectre of Stagnation? Europe in the World Economy

The Research Network Macroeconomics and Macroeconomic Policies announces its 19th annual conference to be held in Berlin October 22-24, 2015. The conference title is: “The Spectre of Stagnation? Europe in the World Economy.” Submissions are welcome (deadline July 14 2015). More...

Social Europe blog

The Greek Stand-off: A Proper Sense Of Perspective Is Urgently Needed

There is a drastic imbalance between the high economic risks of Grexit and the low costs of giving Greece's economy enough time to get back on a growth path. Only the latter would can assure that structural reforms work and that the country continues to service its debts. By Andrew Watt.

To the article


Article in Oxford Economics Papers

What fiscal policy is most effective?

Using a unique data set of 104 studies on fiscal multiplier effects Sebastian Gechert finds public spending multipliers to be much higher than tax and transfer multipliers. Public investment multipliers are even larger than those of spending in general.



Social Europe blog

Less austerity, not more structural reforms to increase Greek investment

Andrew Watt shows that investment in Greece has strongly decreased with austerity. Structural reforms will hardly help to increase investment - without such reforms, the investment share was higher in Greece before the crisis than it was in Germany.

Link to the article


New Working Paper

Is debt always driving growth?

The economist Steve Keen claims that credit always drives aggregate demand. Severin Reissl critizizes that Keen's theory overreaches. Credit can play an important role but the link between credit and demand is much more complicated than Keen makes it out to be.

Download (pdf)


Austerity in Greece

Economic disaster - and more debts

In this Policy Brief Sebastian Gechert and Ansgar Rannenbert show that the drastic austerity measures implemented in Greece have led to an historically unique economic slump - so that the debt-to-GDP ratio has even increased.

Download the Policy Brief (pdf)



Austerity reduced household income drastically

Austerity in Greece led to drastic income reductions for private households. Households with medium or low income were hit hardest. This is what Tassos Giannitsis and Stavros Zografakis show in their study "Greece: Solidarity and Adjustment in Times of Crisis".

Download the study (pdf)

New Working Paper

Quantitative easing with bite: a proposal for conditional overt monetary financing of public investment

Andrew Watt proposes a way to permit monetary financing of public investment in the EMU. This would stimulate growth reliably and sustainably, help avoid a deflationary trap while at the same time safeguarding the independence of the ECB.

Download (pdf)


5th International Summer School

Keynesian Macroeconomics and European Economic Policies

The summer school aims at providing an introduction to post-Keynesian economics and to the problems of European economic policies It takes place from July, 26th to August 2nd in Berlin. Deadline for applications is March, 15th. more...

CEPR / Vox.eu

The economic effects of fiscal consolidation in the Euro Area

Sebastian Gechert, Andrew Hughes Hallett and Ansgar Rannenberg have calculated to what extent the euro area’s fiscal consolidation depressed GDP. They find that the negative impact on GDP was substantial and that this made deficit reduction much harder.

to the article on vox.eu
Article on CEPR (pdf)



Current account balances and income distribution

In a new working paper Patrick Grüning, Thomas Theobald and Till van Treeck analyze the effect of changes in income distribution on current account balances in Germany. The paper is part of a research project funded by the Institute for New Economic Thinking (INET).

to the working paper
Overview over INET project

Social Europe Blog

Greece Deserves German Support

Fabian Lindner shows that Greece’s economy has contracted more since 2008 than Germany’s economy did in the Great Depression of the 1930s. This is why Germans today should be open to Greece’s new government.

to the article



Greece could grow out of its debts – a “haircut” is unnecessary and dangerous

Greece has to leave the Eurozone or a new debt “haircut” is necessary – this is what many pundits think. But there are alternatives. Andrew Watt shows that with a little help the country could grow out of its debts.

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Social Europe blog

The ECB's quantitative easing and its economic effects

Andrew Watt on the ECB's plans for quantitative easing, on why QE is - contrary to many media comments - a logical further step to fight deflation and what will be QE's likely effects on economic growth.

To the article
More by Andrew Watt on Social Europe


The fairy tale of higher growth and employment via TTIP

TTIP is often advertised as bringing about more growth and employment. Many “independent” studies draw this conclusion. However, a comparison of three influential studies shows that even if a wide ranging free trade agreement were to be reached the expected effects on growth and employment are minimal. Contribution by Sabine Stephan for the Friedrich-Ebert-Stiftung.

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Reasons for low private investment in Germany

The private investment share is very low in Germany when compared to other European countries. This is mainly due to low real estate investment after the burst of a real estate bubble at the end of the 1990s. Investment in equipment is low in historical perspective because demand is not sufficient and already existing capacity is not fully used. Contribution by Fabian Lindner for the Friedrich-Ebert-Foundation.

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Alternative economic policies for the Eurozone

The independent Annual Growth Survey for 2015, produced by researchers at the OFCE, the ECLM and the IMK, offers an alternative economic policy strategy for Europe: stronger quantitative easing would help to reduce differences in interest rates substantially; today’s trajectory of deficit reduction must be relaxed, and a public investment programme needs to be launched; the reduction of poverty and inequality must be at the heart of economic policy; and brakes need to be put on wage deflation.

Download the report (pdf)
General information on iAGS


The European Commissions New NAIRU: Does it Deliver?

The NAIRU is a key component of potential output and as such critically affects output gap estimates. In May 2014, the European Commission changed its specification of the NAIRU for several countries and lowered its NAIRU estimates - in the case of Spain from 26.6% to 20.7% for 2015. We find that the NAIRU is largely determined by actual unemployment. This calls in question both the interpretation of potential output estimates as barriers to more vigorous inflation-stable economic activity and the accuracy of structural deficit figures. By Sebastian Gechert, Katja Rietzler and Silke Tober.

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Austerity, cyclical adjustment and the remaining leeway for expansionary fiscal policies in the Euro area

Fiscal policy in the Euro area is still dominated by austerity measures implemented under the institutional setting of the 'reformed' stability and growth pact, and the even stricter 'fiscal compact'. At the same time, calls for a more expansionary fiscal policy to overcome the economic crisis have become more frequent, recently. Therefore, the article tries to assess the remaining leeway for a truly expansionary fiscal policy within the existing institutional framework. By Achim Truger.

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