It has been a public ritual for more than five decades: every November, the German government appears before the press in Berlin and is officially handed the annual report of the German Council of Economic Experts. In the report, five economists assess Germany's economic development and suggest improvements. This is a typical example of policy advice, one of the main areas of activity for economists, alongside research and teaching.
Research institutions of considerable global renown
The members of the German Council of Economic Experts tend to come from one of Germany’s seven state-funded and politically-independent economic research institutions. Located in Berlin, Essen, Frankfurt, Halle, Kiel, Mannheim and Munich, they are spread all over the country and have different areas of specialisation. The Institute for the World Economy (IfW) in the Baltic port city of Kiel for example specialises in globalisation processes. With a view to understanding opportunities and problems, researchers explore not only economic structures but also the associated political, ecological and social issues.
A wealth of data
The German Institute for Economic Research (DIW) in Berlin focuses to an equal extent on social and economic questions. For example, its Gender Economics research group studies the gender pay gap – the fact that women and men tend to be paid differently. Though the gender pay gap has declined noticeably in Germany since the 1980s, at 21 percent it is still considerable by European standards. For this research, the scientists have a wealth of data at their disposal: the Socio-Economic Panel (SOEP) – the largest long-term multidisciplinary study in Germany. For more than 30 years, roughly 30,000 people have been providing information about their incomes, employment, education, health and life satisfaction, as well as about their personalities. "Every scientist in the world can access the data", explains the economist Gert G. Wagner, who headed the SOEP for more than two decades.
Prosperity, competition and digitisation
The ifo Institute in Munich pursues more conventional economic research. First and foremost, its researchers explore how state intervention influences economic prosperity. The institute is publicly known for its Business Climate Index, which is a kind of weather forecast for economic development. The RWI – Leibniz Institute for Economic Research (RWI) in Essen also analyses economic cycles, whereas the Halle Institute for Economic Research (IWH) in the eastern part of Germany researches economic transformation processes, such as those that have taken place in Europe since the Eastern Bloc collapsed in 1989. The economists at the Leibniz Centre for European Economic Research (ZEW) in Mannheim concentrate on the question of how competition works and how monopolies can be prevented – also taking the influence of digitisation into account.
Financial economics in focus
Home to a stock exchange, the Bundesbank (Germany's central bank) and the European Central Bank, Frankfurt am Main is a global financial hub. It is no coincidence then that financial economists conduct their research there. Since 2013, more than a hundred economists, business administration specialists and legal experts at the Sustainable Architecture for Finance in Europe (SAFE) have been researching one key question: what form would a financial system have to take in order to guarantee stability while at the same time fostering innovation and competition? The centre is funded by the Hessian excellence initiative LOEWE and run by Goethe University Frankfurt, among others.
Graduate programme in Berlin
Besides the major economic research institutes, almost every university in Germany has an economics department, too. In 2019, Berlin's three main universities – FU Berlin, TU Berlin and Humboldt-Uni zu Berlin – joined forces with the DIW and other universities and research institutions to form the Berlin School of Economics with a view to offering first-class research opportunities for doctoral students and postdocs. "Those who do a PhD here have excellent career prospects", promises Gert G. Wagner, citing the example of Nicolas Ziebarth, a graduate of the predecessor programme who in 2017 was given a professorship at the renowned Cornell University in the USA. Perhaps the Berlin graduate programme will soon produce a new member of the German Council of Economic Experts who will keep a close eye on politics in Germany and elsewhere.