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IREF is a free-market oriented think tank. It promotes ideas, events, and academic research. With regard to research, IREF supports original projects that lead to the production of papers of academic quality of at least 7,000 words. This support is not a prize to published work, nor is it an encouragement to “work in progress”.

According to a recent representative survey conducted by Der Spiegel, a majority in Germany does not consider the country’s income distribution to be fair. 47.3 percent of the respondents consider the income distribution to be „definitely not fair“ and for 27.5 percent it is „rather not fair“. Only 4.4 percent perceive it as „definitely fair“ and 12.5 percent as „rather fair“. However, is the observed income inequality really unfair? And, what degree of inequality would be fair? An IREF Working Paper by Pablo Duarte tackles these questions empirically.

Last February, this website hosted an article titled «The unintended consequences of coronavirus». At the time the article was published, the situation was not at all dramatic in Europe. For example, the official Covid-19 figures in Italy and Germany mentioned very limited number of cases. Governments were confident that everything would be under control, as witnessed by the fact that on February 15, two tons of medical equipment were shipped to China.

The literature has put forward two main arguments to explain the recent rise of populist parties and their electoral success. On the one hand, commentators have highlighted the rising level of uncertainty about the economy and grievances among the losers in global markets. Resentment, it is argued, has been susceptible to the anti-establishment message of populist movements and parties that blames ‘Them’ for taking away from “Us” prosperity, job opportunities, and public services from ‘Us’. On the other hand, authors have emphasised the role of culture and the backlash against long-term shifts in progressive and liberal social values. Such cultural backlash is especially strong among the older generation and less educated people, who suffer the displacement of familiar traditional norms and the rapid cultural changes that seem to be eroding the basic values and customs of Western societies. Other external shocks – such as the massive recent increase in immigration – are related to both explanations. Immigrants ‘compete’ against native low-wage, unskilled workers, and at the same time bring with them new values and behaviours that may be source of tensions with the residents in the destination countries.

The damages caused to individuals and businesses by the outbreak of the COVID-19 pandemic are so vast that it will be almost impossible to make an accurate estimate of them. However, if those who contributed to such destruction can be called to account for it, by way of civil liability, the injured parties will obtain justice, and the damaging economic consequences will fall on those responsible. Instead, if internalizing the damage proves impossible, the deadweight loss will remain in the hands of entirely blameless victims.

N26, Celonis and Biontech are the most recent success stories of the German start-up scene. All three enterprises have collected higher sums of venture capital in the past year. As good as this news may be, however, the overall picture of the German venture capital scene is rather problematic. Young German enterprises receive comparatively little risk capital.

In a new IREF Working Paper, David Stadelmann (Bayreuth University and IREF) and his co-authors discuss how the corona epidemic can be made less burdensome. They focus on the role of those who are immune after recovering from the illness and do not pose any health risks to others. The authors point to corona immunity as a resource that should be searched, found, produced, certified, and finally employed to ease the way out of the lockdown.

The literature has put forward two main arguments to explain the recent rise of populist parties and their electoral success. On the one hand, commentators have highlighted the rising level of uncertainty about the economy and grievances among the losers in global markets. Resentment, it is argued, has been susceptible to the anti-establishment message of populist movements and parties that blames ‘Them’ for taking away from “Us” prosperity, job opportunities, and public services from ‘Us’. On the other hand, authors have emphasised the role of culture and the backlash against long-term shifts in progressive and liberal social values. Such cultural backlash is especially strong among the older generation and less educated people, who suffer the displacement of familiar traditional norms and the rapid cultural changes that seem to be eroding the basic values and customs of Western societies. Other external shocks – such as the massive recent increase in immigration – are related to both explanations. Immigrants ‘compete’ against native low-wage, unskilled workers, and at the same time bring with them new values and behaviours that may be source of tensions with the residents in the destination countries.

Online shopping is increasingly popular. According to a survey from 2019, almost 90 percent of 25- to 44-year-olds had ordered something online during the previous three months. Even half of those aged 65 or more confessed they shopped online. However, online shopping is also criticised for damaging the climate. The Süddeutsche Zeitung, for instance, demands higher postage to protect the climate from the increasing number of parcels that need shipping due to online shopping. Die Welt also considers the possibility of raising postage charges to fight climate change. The article claims that online returns in Germany cause as many daily CO2 emissions as 2,200 cars driving from Hamburg to Moscow. So, do we have to feel bad whenever we order shoes, smartphones or diapers online? Studies have assessed the effects of online trading. They conclude that online orders do usually not cause more greenhouse gas emissions than bricks-and-mortar trade. Yet, there is potential for improvement.

When they introduced the euro, European governments were expecting that the new currency would rival the dollar on international markets. Twenty years later, the euro is still far behind on that account. A recent paper by Ethan Ilzetzki, Carmen M. Reinhart and Kenneth S. Rogoff (Why is the Euro punching below its weight?, NBER Working Paper No. 26760, February 2020) investigates this issue, and shows that the advent of the European currency did little more than consolidating the pre-existing franc and deutsche mark zones.