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2nd Ifo BrIEF
Ifo Brussels International Economic Forum
Desperate Remedies:
Lessons from the Crisis
11 November 2008
Institute
for Economic Research
at the University of Munich
© Ifo Institute for Economic Research at the University of Munich
Publisher:
Ifo Institute
Editors:
Paul Kremmel
Jutta Albrecht
Photography:
Romy Bonitz
Layout and design:
Jasmin Tschauth, Elisabeth Will and Kinga Bien
Printing:
Majer & Finckh, Stockdorf
Conference venue:
Committee of the Regions
Bâtiment Jacques Delors
Room: JDE 51
Rue Belliard 99–101
1040 Brussels
Belgium
Contacts:
Executive committee:
Jutta Albrecht
Ifo Institute for Economic Research
Tel. 00 49/(0)89-92 24-13 32
Mail: [email protected]
Annette Hagemann
Committee of the Regions
Tel. 00 32/22 82-20 09
Mail: [email protected]
2nd Ifo BrIEF 2008
Contents
3
Desperate Remedies: Lessons from the Crisis
4
Welcome Addresses
6
I n tro d u c t io n
The European Response to the Financial Crisis
World Economy in Crisis: Causes and Consequences
13
P a ne l 1
Stagflation Ahead?
Output Slump and Excess Inflation in Europe
17
P a ne l 2
European Tax Policy – Taxation of Multinationals
22
Appendix
2nd Ifo BrIEF 2008
3
D espera te Re med ies:
Lessons fro m the Crisis
The Committee of the Regions and the Ifo Institute for Economic Research at the
University of Munich jointly hosted a conference in Brussels on 11 November 2008.
This Ifo BrIEF (Brussels International Economic Forum) delved into some of the
issues that pose major policy challenges in the years ahead: the fi nancial crisis and
its effects upon the real economy, inflation/deflation, and a capitalisation- and investment-friendly tax regime for multinational corporations. The event was the second in an annual conference series, which seeks to strengthen input from economic
experts in European policy-making.
Hosted by Ifo President Hans-Werner Sinn and Committee of the Regions SecretaryGeneral Gerhard Stahl, the conference opened with a debate featuring Joaquín
Almunia, Economic and Monetary Affairs Commissioner, and Ifo President HansWerner Sinn. It addressed the causes of the fi nancial crisis and its consequences on
the real economy. A fi rst panel then explored policy options available in the current recession, with contributions by Pervenche Berès, President of the European
Parliament’s Committee on Economic and Monetary Affairs, and Kai Carstensen,
Head of the Business Cycle Analyses and Surveys Department of the Ifo Institute.
A second panel examined European tax policy and the taxation of multinationals,
with presentations by Robert Verrue, Director General for Taxation and Customs
Union, and Thiess Buettner, Head of the Public Finance Department of the Ifo
Institute.
2nd Ifo BrIEF 2008
4
Welcome Add r es s es
I
Gerhard Stahl
Secretary-General,
Committee of the Regions,
Brussels
t is a great pleasure for me to welcome you to
the 2nd Ifo Brussels International Economic
Forum. The Forum, jointly organised by the
Committee of the Regions and the Ifo Institute
for Economic Research, has the goal of strengthening the contribution of economic expertise to
European economic policy-making and providing a platform for European decision-makers to
meet with economists to discuss key issues pertaining to Europe’s future.
Last year, in the 1st Ifo BrIEF, we discussed
how to reach the goals of the Lisbon Agenda,
addressing the dramatic changes in the division
of labour brought about by globalisation and
Europe’s answer to these challenges. Already
last year we had the privilege of a keynote
speech by Commissioner Almunia and I welcome very much his presence again here today. I
am sure that the expectations for today’s conference are even higher. In a world of financial and
economic changes political leadership is needed
and new economic answers are expected. Who
would be a better partner to discuss this than
Professor Sinn and the Ifo Institute with its economic expertise?
Today’s programme is entitled “Desperate
Remedies: Lessons from the Crisis”. The programme today starts with the keynote speech of
Commissioner Almunia followed by an examination of the financial crisis by Professor Sinn.
In the afternoon there will be the chance to discuss with Pervenche Berès, the Chairwoman of
the Committee on Economic Affairs, and we
will also have the Director General of Taxation
and Customs Union of the European Union
to discuss tax policy. Their comments will be
supplemented by the analysis of Ifo economic
experts.
Hans-Werner Sinn
President, Ifo Institute, Munich
I look forward to a lively debate on the topics
presented.
I
too am pleased to open this second 2nd Ifo
Brussels International Economic Forum (Ifo
BrIEF), jointly organised by the Ifo Institute
and the EU Committee of the Regions.
I welcome all of you, especially Commissioner
Almunia, to what has now become an annual
event. We had planned to speak about the real
climate and how it is changing, but now we are
speaking about the real economic climate and
what may lie in store for us. We changed the title
because of the most recent events. I think this is
quite appropriate, given the risks that the world
economy is facing from both financial and the
real side.
Our presentations this morning will discuss the
financial and economic crisis. In the afternoon
we will examine whether this will be a crisis with
inflation. With all the money that governments
have pumped into rescue plans and which central banks have provided for liquidity, is there
an additional inflation risk that we are facing?
This will be discussed in the first panel this afternoon by Pervenche Berès of the European
Parliament and by Kai Carstensen of the Ifo
Institute. In the second panel we will discuss
European tax policy, in particular the taxation
of multinational corporations. Due to the increased possibilities to shift taxable profits from
one country to another, one obviously needs a
harmonised approach here. You will hear what
Robert Verrue of the European Commission
and Thiess Büttner of the Ifo Institute have to
say about this issue.
I would like to thank you for attending the 2nd
Ifo BrIEF. We have very many important policymakers in attendance today, which will ensure a
lively discussion and new insights.
It is now my privilege to ask Commissioner
Almunia to open the introductory debate on the
causes and consequences of the current financial and economic crisis.
Gerhard Stahl
Hans-Werner Sinn
2nd Ifo BrIEF 2008
In t ro d u c t i o n
6
A Recipe for R e c o v e r y : T h e E u r o p e a n
Response to t h e F i n a n c i a l C r i s i s
Jo a q u ín A l mun i a
C ommi ssi o n e r for Econom ic and M onetar y Policy,
E u rop e a n C ommission, Br ussels
Joaquín Almunia
Commissioner for Economic
and Monetary Policy,
European Commission, Brussels
A
fter a period of excess and risk accumulation in the financial sector, we are now
living through a painful market correction. The
financial system is enduring a phase of severe
deleveraging, characterised by dysfunctional
credit markets, unprecedented write-downs in
asset valuations, generalised risk aversion and
threats to the stability of the banking sector.
Although the banking sector has been at the
centre of the crisis since the beginning, problems
have spilled into other parts of the financial system – to the enormous credit default swaps market, insurance companies and hedge funds.
everything in our power to return markets to
normal functioning so that they can continue
their job of financing households and businesses
and supporting growth.
The Commission has called for rescue packages to be put in place rapidly and consistently
to help restore confidence. We are monitoring
their implementation closely. We are also prepared to use competition rules to ensure that a
level playing field is maintained between beneficiaries and non-beneficiaries of state aid and
to prevent distortions in the internal market.
For those member states experiencing balance
of payment pressures or serious financial sta-
“From the outset, Europe has taken decisive
action to manage this crisis”
From the outset, Europe has taken decisive action to manage this crisis. Governments, the
Commission and the European Central Bank
(ECB) have been working closely together to contain the turmoil, protect savings and maintain a
credit flow for businesses and households.
The ECB has injected huge amounts of liquidity
into markets to prevent a severe credit crunch
by cutting interest rates. And the October agreement by member states
on an EU rescue package for banks was an
unprecedented act of coordination, allowing us to
synchronise national responses within a common
European framework.
Initial market reactions
to these rescue packages have been positive.
There has been a modest improvement in the
functioning of interbank
markets. Yet conditions
remain precarious. It’s
clear that we must do
2nd Ifo BrIEF 2008
bility risks, the EU stands ready to provide
financial assistance.
Even as we deal with the immediate crisis, we
have to think further ahead. The last months
have exposed the weaknesses in our financial
systems. We must act to ensure sure that a crisis of this scale does not and cannot happen
again. With this in mind, the Commission has
accelerated work on a package of precise mea-
Introduction
7
geopolitical realities of the
21st century.
sures that tackle shortcomings in our financial
sector. We have already proposed reforms to
capital requirements, deposit guarantees and
accountancy rules.
We have put forward measures to tighten up the
regulation of credit rating agencies, followed by
an initiative on executive pay. We are also working on regulating derivatives, hedge funds and
private equity. And a high level group chaired
by Jacques de Larosière has been set up to assess cross-border supervision in Europe. It will
present its first results to the European Council
in the spring. This is part of a major effort to
reform the supervisory and regulatory model on
which our financial markets are based.
But clearly, given the international nature
of financial markets, this cannot be a purely European exercise. It should be a global
one. Hence the international summit in
Washington in mid-November – the first of a
series – was crucial: first to establish consen-
The financial turmoil has
also had considerable fallout for the real economy.
The crisis has caused confidence to fall significantly.
It is aggravating the housing market corrections
in some advanced economies. With the US and
some European countries
in recession, and the outlook darkening for emerging economies too, the
global economy is slowing
and external demand is falling rapidly.
While all member states will experience a downturn, it will be more pronounced and protracted in those countries with greater exposure to
shocks. But there is one piece of good news –
the downturn is helping to ease inflation as oil
prices fall.
The outlook is not only bleak, it is also highly uncertain. There is a real risk that if the
financial stress intensifies or lasts longer, it
may have a greater effect on the economy and
could fuel the negative feedback loop between
the economy and the financial sector. In fact,
the International Monetary Fund has now
updated its own forecasts with even gloomier
figures.
Faced with the most difficult economic situation
in decades, we need to mobilise a concerted and
co-ordinated policy response as we have done
in the financial sector. This means using all the
“We can mitigate the impact on the real economy
if we fast-track certain structural reforms.”
sus among the key international partners on
what needs to be done to prevent a repeat of
the current situation, and then to pave the way
for effective, concrete reforms. The scope of
these discussions should be wide. We need to
tackle not just the lax financial regulation but
also strengthen international crisis management capacities and address the global current account imbalances that lie at the root of
today’s crisis.
policy instruments we have available to limit the
slowdown, protect jobs and lay the ground for a
sound recovery.
We are realistic. We know that success will not
come easily or quickly. The current framework
for global governance makes it particularly difficult to generate the ownership and legitimacy
for real change. This is why we must grasp this
opportunity to drive forward a restructuring
of global governance – including the Bretton
Woods institutions – so that they reflect the
Second, within the rules of the Stability and
Growth Pact there is scope for budgetary policy
to cushion the slowdown. We do not underestimate the challenges ahead for fiscal policy. The
slowdown will inevitably take its toll on budgetary positions. And emergency measures to support the banking sector are already having an
effect on government debts.
The first tool is monetary policy. The recent fall
in inflation has opened the way to interest rate
reductions to help sustain consumption and investment. The European Central Bank has already demonstrated its readiness to act by cutting interest rates.
2nd Ifo BrIEF 2008
8
Introduction
But the revised pact is designed to handle such
crisis situations. Since 2005 it has the inbuilt
flexibility to manage the deterioration in public
finances. We invite member states to draw fully
on the flexibility of the pact. However, this cannot be a license to increase the burden for future
generations.
Fiscal policy should remain on a sustainable
course. It should take into account the different situations in different member states. The
recent sharp increase in spreads on sovereign
debt in a number of member states is a reminder
that the scope to use fiscal policy to support
the economy varies across countries. The pact
provides for specific treatment when “exceptional circumstances” exist. A deviation above
the 3 percent ceiling, if it is temporary and the
deficit remains close to the reference value, does
not trigger the opening of an Excessive Deficit
Procedure (EDP).
If the EDP is open, but the economic situation
is what the pact defines as “special circumstances”, the deadlines for the correction of an excessive deficit can deviate from the general rule and
be extended to more than one year. And if this
situation continues at the end of that period,
new recommendations can be issued without
advancing to the next steps in the procedure.
the bank can continue to support businesses as
well as accelerate financing of climate change,
energy security and infrastructure projects.
I have outlined just a few key measures. However,
as with policies in the financial sector, success of
our European strategy will depend on whether
we can co-ordinate our action at the European
level, and, building on a common European approach, if we can generate an international response to the slowdown.
The downturn has a global nature, and international partners need to take co-ordinated measures to boost world demand, particularly those
countries or regions with large current account
surpluses. This would both help support global
growth and facilitate the unwinding of large
global imbalances.
We also need to work together to prevent protectionism from taking hold. In developed and developing countries alike, economic nationalism
is on the rise and the benefits of globalisation
are being questioned following the crisis. This
is understandable. But history tells us that it is a
dangerous tendency, one that can turn a downturn into a protracted and more severe problem.
It is vital that we in Europe reaffirm our commitment to the principle of openness and lead
“We also need to work together to prevent
protectionism from taking hold.”
We can mitigate the impact on the real economy
if we fast-track certain structural reforms, especially those which boost demand and help reduce
inflationary pressures, supporting household
purchasing power. Immediate priority should be
given to measures which enhance productivity.
So we must step up investments in research and
technology and in innovation. Pressing ahead
with measures in low carbon technologies and
energy efficiency would both support European
competitiveness while tackling climate change.
Accelerating implementation of the Services
Directive should also be a high priority, given
the key role services play in creating jobs and
reducing inflationary pressures.
As unemployment is set to increase, we will also
need measures that ease the hardship of job losses and lay the ground for renewed employment
growth. This means strengthening “flexicurity”
in our labour markets policies, making sure that
income support is available to vulnerable households and investing in education and skills.
Finally, we must take immediate steps to improve access to financing for businesses, especially SMEs. Part of this can be done through
the European Investment Bank. We will propose
reinforcing the capital base of the EIB so that
2nd Ifo BrIEF 2008
by example. We must uphold the competition
rules that underpin the Single Market and come
out strongly against trade barriers.
Faced with the most daunting economic situation in decades, we have to act on three fronts:
to stabilize and reform the financial system; to
limit the impact on economic growth and prepare the ground for recovery; and to mobilise
a co-ordinated, global response to the macrofinancial risks that threaten the stability of the
world economy. The European Commission’s
recovery plan aims to drive forward a co-ordinated response to the crisis, one that instils confidence in our economic and financial systems
and safeguards prosperity for citizens and businesses.
Introduction
9
Wo rld Ec onom y in Cr is i s:
C au ses and Cons eque nces
H a n s - We r ne r S i n n
T
o comprehend the deeper economic reasons
for the current crisis we need to look beyond
the record US current account deficit, the low US
savings rate, subprime mortgages and the bursting of the real-estate bubble to the issue of limited
liability and how this was misused by American
investment banks. What do I mean? Limited liability is a legal privilege that was given to joint stock
companies in the 19th century in Western Europe
and North America but has deep historical roots in
Medieval Italy and the Netherlands. This was a major innovation in corporate law that made modern
capitalism possible. You cannot create a joint stock
company without the provision of limited liability,
and with millions of shareholders you cannot make
each individual shareholder liable. The problem
is, however, that limited liability was misused by
American investment banks. Bankers became involved in risky business transactions and exploited
the privilege of limited liability to the maximum
extent by running their companies with only tiny
amounts of equity capital – around ratios of 4 percent of less. Why did they have so little equity? It’s
of business – and generate huge rates of return. If
you have a rate of return of 25 percent or more, you
double your equity in just a few years, provided you
retain it. So there would have been an overflow of
equity if they had kept it in the banks. The shareholder value principle meant that equity had to be
taken out of the bank to secure it over time. This
was the deeper reason for the crisis.
There is another aspect as well. Once you have
decided to run your bank with excessive leverage,
then you might as well take great risks. If you have
nothing to lose, you can take excessive risks, which
will give you huge profits if you are lucky and huge
losses if you are unlucky. Because you only bear
the losses to the extent you have equity in the company, which is close to zero, most of the losses are
borne by someone else – the creditors of the banks
and the governments, which in the end have to bail
out the companies. If an investment bank has the
choice between a safe investment strategy with a
low rate of return and a risky one with a large rate
of return but the same average value, it will chose
Hans-Werner Sinn
President, Ifo Institute, Munich
“The problem is, however, that limited liability
was misused by American investment banks.”
not that the shareholders were unable to provide
capital. On the contrary, these banks had huge
rates of return – between 25 and 40 percent – so the
money was there. They could have left it in the
company, but the idea was to take it out as quickly as possible so it would not be lost in turbulent
times. They thought it was better to run the bank
with excessive leverage – 4 dollars for 100 dollars
the riskier one, which increases the expected profit
above the rate of return on the safe investment.
Thus the riskier your strategy is, the higher your
expected profit – this is the microeconomic reason
for excessive risk-taking.
But not only Wall Street turned into a casino –
Main Street also gambled. A similar strategy –
excessive risk taking due
to limited liability – can
be observed on the part of
American
homeowners.
Normal homeowners are
not in the subprime market.
In the subprime crisis we
are talking about a segment
of homeowners who have
low incomes and are protected by law against claims
made by banks for anything
beyond what they provided
as collateral. In many states
if you have a below-average
or below median income,
you can buy a house with
borrowed funds and if you
2nd Ifo BrIEF 2008
10
Introduction
have difficulties repaying the loan, the bank does
not have the right to obtain your income from labour. It only has a right to foreclose and sell the
house. This limitation of liability has been crucial
in encouraging homeowners in the subprime segment to take excessive risks.
The question is now why did the banks participate?
If they knew that the loans would not be repaid if
house prices went down, why did they grant the
loans in the first place? Were they so stupid that they
didn’t know who their clients were? No, in fact they
were very clever, because they securitized these
claims against the homeowners. They did not keep
them on their books. Instead they created mortgagebacked securities, which they sold to someone else
in order to get rid of the risk. This someone else
was another bank that bought the mortgage-backed
securities, and they bundled them together into a
package of good and bad claims, gave the package a name and created new asset-back securities,
which were claims on the package that contained
the claims against the homeowners. This package
was then sold to another bank and so on, creating
a cascade of claims on claims. And in the end the
banks did not really know what claims they had.
the crisis? We can distinguish between short-term
and long-term strategies. Short-term strategies can
mitigate the crisis and prevent a meltdown. Longterm strategies should provide rules for sound
banking business. Unfortunately, there is a conflict
– the more you spend now, the lower the incentive
for bankers to do sound banking in the future because they will expect the government to bail them
out. Some hundreds of billions of euros have been
provided by the European Central Bank to improve
liquidity. Interest rates have been lowered. But this
is not really the solution, because it is not only a
liquidity crisis. Rather it is a solvency crisis resulting from the enormous loss of equity and the undercapitalization of the banking system.
Short-term credit procurement by the European
Central Bank (ECB) – lending between banks has
stopped. Whoever has money deposits it at the ECB
and whoever wants money takes the money from the
ECB. The banks do this even though they have to
pay for the interest spread the ECB charges. There
are also state guarantees, as in the case of Hypo
Real Estate in Germany. Moreover, the government
can purchase toxic credit claims, and there is the
possibility of partial nationalization. The British
developed this plan
and I think it is sound.
The advantage is that if
the government invests
its money, it also has
claims for future dividends so that the taxpayer is not cheated.
“Long-term strategies should provide
rules for sound banking business.”
You may wonder why the European banks bought
these packages. After all there were the rating agencies that assessed the creditworthiness of the claims
and the repayment probabilities of those involved.
But they did not perform properly. They were much
too generous with some of these products and gave
them a triple-A rating even though the claims were
dubious. This is partly because these rating agencies are private joint stock companies. They make
money from giving advice. When they evaluate a
bank or its products, they collect huge honoraria.
And how can such a rating agency easily downgrade a big client like Lehman Brothers? It’s much
easier to correctly assess the true value of a small
European bank. If a
minor client doesn’t return, it doesn’t matter but
you can’t do that with an
important client. What
we see here is that rating
agencies are in principle
unable to perform and do
their job properly. This
is a task for the government and not private institutions. And I believe
in fact that these rating
agencies will not survive
this crisis.
What are the policy measures required to handle
2nd Ifo BrIEF 2008
There is a final problem, which I must admit I do not
completely understand. It’s a potential time-bomb
for the system – 50 trillion credit default swaps – a
magnitude beyond all imagination. Credit default
swaps mean that if a bank gives a loan to someone, it can insure itself with a contract with another
bank. The first bank pays a regular fee and if the
debt on a loan is not repaid, then the second bank
pays indemnification. That sounds good but again
there is a chain of claims involved. The second bank
also insures itself with a third bank that pays if the
second bank has to pay the first bank, etc. In this
Introduction
11
the ECB, to really control the
banking business.
market there are insurance contracts where Bank C
insures Bank B in case Bank A has a problem, even
though neither Bank B nor Bank C has any business connection with Bank A. There are rumours
that companies are driven to bankruptcy just by
spreading bad information on the market to create
an insurance case. No one completely understands
this but it is definitely a problem that needs to be
investigated, a problem that creates a great risk that
we presently do not have under control.
So what long-term policy measures are necessary if
we want to have a sound banking business? Basel II
seemed to be a good start when it was introduced,
but we now know that it has been too lax a regulatory system. The banks must be regulated; they cannot control themselves. In particular conduits and
other offshore activities need to be included in the
balance sheet in a Basel II type system. In general
we need higher equity capital requirements. First of
all, if banks are required to have more equity capital, they will have a cushion in case of a crisis and
won’t go bankrupt. And second, much more impor-
I would like to add that
the International Financial
Reporting Standards (IFRS)
accounting rules should also
be reconsidered because this
market to market, fair value
principle means that the turbulence of the markets is
immediately translated to
the balance sheets, thereby
creating a lot of unforeseeable legal consequences. In
Germany we had the “lowest value principle”, which
meant that typically you had assets in your books
at the historic purchasing price. When the price
later increased you had silent reserves that were not
reported and that you could draw on in turbulent
times. This applied to banks and corporations of
all sorts and thus they were not vulnerable to economic shocks as they are today with the fair value
principle.
The true microeconomic, regulatory reason for the
crisis was undercapitalization of the banking system, which led to excessive risk taking. In order to
prevent this from happening again, higher equityasset ratios must be harmonised. Only with an internationally harmonised system – a joint agreement between countries – will we be able to prevent
a competition of laxity in international banking.
“The competition of governments, especially of
regulators, leads to a competition of laxity.”
tantly, they will be more prudent. If large amounts
of money are at stake, the shareholder will make
sure that the managers chose a prudent and cautious
strategy. They will not be looking for 25 percent
rates of return on equity. They will be content with
less and prefer safer strategies.
To achieve this international banking harmonisation is absolutely necessary because otherwise
there will be a competition of regulations between
countries. The competition of governments does
not follow the same rules as those of private companies. The competition of governments, especially
of regulators, leads to a competition of laxity. One
regulator tries to undercut the rules of the other
countries in order to attract banking business. The
only possibility is an international agreement, a
set of rules controlled by the IMF and then broken down by the central governments in Europe,
2nd Ifo BrIEF 2008
P a n e ls
13
P anel 1
S tag flat ion Ahe ad?
Ou tp u t Slum p a nd Exc ess I nf l at i on
i n E u ro pe
P e r v e n c h e B erés
I
would like to start by drawing my conclusion
relating to the topic of this panel. I believe
that it is much more likely that Europe and the
rest of the world are now moving faster and
faster towards a deep recession with more unemployment and thus lower inflation, especially
as the demand for oil and other commodities
decreases. Stagflation – high inflation together
with declining growth – is no longer likely. We
are much more likely to see a prolonged period
of slow or even negative growth.
statement, the Bank of England warned that the
economy in the UK was set for a “severe contraction” in the coming months. Even with consumer-price inflation running at 5.2 percent, the
bank saw a need to react to the sharp downturn
in the economy.
One can then only wonder why the European
Central Bank (ECB) has been slow to react in
terms of interest policy to the main challenge
of slower or even minus growth next year. I am
Pervenche Berés
Chairwoman of the Committee on
Economic and Monetary Affairs,
European Parliament, Brussels
“We are much more likely to see a prolonged
period of slow or even negative growth.”
But the future economic development also depends on the policy actions to be taken not only
by us in Europe, but also in the rest of the world,
notably in the US, China and in the oil producing countries. Let me start by explaining the reasons for my conclusion.
Last week the International Monetary Fund revised its economic forecast within a month of its
biannual world outlook and said that advanced
economies were likely to contract in 2009 for the
fi rst time since the Second World War.
Last week the Bank of England also slashed interest rates to their lowest level since 1955, when
the bank’s benchmark interest rate was lowered
by 1.5 basis points, to 3 percent. In an extended
sure this is an issue which will be debated in the
near future. I would also like to make a short
comparison to the stagflation era of the 1970s.
As in the 1970s inflation was driven higher by
commodities, which, led by the US, resulted in
subsequent global growth slowing. However,
I would argue that there are several differences, making stagflation highly unlikely today.
Unlike the 1970s, there is no wage-price spiral
in sight today as wages are no longer indexed to
inflation. There are also no governmental price
controls. Furthermore, on the eve of the crisis
commodity prices rose mainly due to positive
demand shocks rather than to negative supply
shocks. The current fall in aggregate demand,
with inelastic supply in the short run, together
with the global slowdown
should therefore result in
a reduction, rather than
an increase, in inflationary pressures. Finally,
the credit crisis and asset
deflation in the developed
world is spreading and we
are experiencing falling
inflation.
My second point is that
we urgently need to act
together at the EU and
global level to establish a
strong and coherent plan
for economic policy for
the near future. At the EU
2nd Ifo BrIEF 2008
14
Panel 1
level we need a fiscal stimulus approach in an environment in which monetary policy is not by itself effective enough under current market conditions and consumers are more and more afraid
to consume. It has become clear that Keynes is
still relevant today. The fiscal stimuli should not
only be timely, targeted and temporary, but they
should also be large enough and co-ordinated at
least at the EU level, if not globally.
They must be timely, so that they reach the
economy quickly and effectively. They must
be targeted so that they do not provide help to
sectors that do not need it, leaving an excessive
deficit and stock of public debt to be paid off
in the future. We need to focus on the sectors
that would really have a “demand” increasing
effect. I am not sure, for instance, that Europe
should copy the US and concentrate support on
the car industry, as the demand multiplier is not
straightforward. Scarce resources need to be
used in the most effective way. The plans must
be temporary, so that the idea of anti-cyclicality
of fiscal policy is preserved, which is also connected with the sectors chosen. They must also
done after a co-ordinated view on the direction to
take concerning economic policy has been established. I am therefore happy that the Commission
has decided to come forward earlier with its views on
a recovery plan in order to give a co-ordinated and
coherent approach to the challenges that lie ahead.
Finally I would like to comment on the discussions at the global level. As we all know the challenges posed by global imbalances have not disappeared. For example, there has been a massive
global redistribution of income from oil importers to oil exporters – a disproportionate number
of which are undemocratic states. Economic adjustments of this magnitude have naturally been
painful, even more so as the “winners” in this
case are less prone to spend, in particular, in the
current financial environment.
For a long time there has been concern about
global imbalances caused mainly by the United
States’ huge overseas borrowing. This policy is
not sustainable, as we have seen today. And now
the president of the US has launched a new comprehensive stimulus package, making the public deficit even larger. Things
would obviously have been
better if issues relating to global imbalances and regulatory
weaknesses could have been
addressed at an earlier stage.
“It has become clear that Keynes
is still relevant today.”
be large enough to have a real effect and be credible. Finally these plans must be co-ordinated so
that they reinforce each other and increase the
impact on the economies. If member states take
independent actions to support their export markets, these measures may be ineffective or even
counter-productive if they are not co-ordinated
with other member states of the same economic
area, such as the euro area.
The revised Stability and Growth Pact provides room to manoeuvre in the EU, even if the
deficits of many members states have resulted
in constraints because of too little action in a
healthy economic environment. The pact allows
the deficit to be temporary and slightly above
3 percent of GDP.
Member states need to
revise their stability and
convergence programmes
based on this new economic
situation and Commission
forecasts. And they should
also update and strengthen
their national implementation programmes under the
Lisbon Strategy for Growth
and Jobs. If they do not, we
are not serious about economic co-ordination in the
EU and in particular in the
euro area. This should be
2nd Ifo BrIEF 2008
In conclusion, I would also like to stress the
needs of the developing world, which may be
forgotten in the current crisis. When we in the
western world are forced to invest trillions to
capitalise our financial institutions, we may have
difficulties keeping our promises to the developing world. But for them it may be a question of
life and death.
The reform of global governance has only started and I believe and hope we will make progress
in the coming months and years.
Panel 1
15
K a i C a r s t e n se n
T
he title of this panel was set some months
ago when inflation was indeed a problem
and expected to rise with rising wage costs. With
the output slump ahead of us that’s probably not
a problem any more.
The first part of the crisis concerns the solvency
problems in the banking sector. Banks are currently having tremendous problems with refinancing, and the current asset price deflation is
adding even more stress on banks and capitalisation. Only with government action have we been
able to prevent a system-wide collapse. This has
growth engine for Europe and the world economy in 2009 and 2010.
Given the structural problems of the US economy – over-consumption over the past years
driven by wealth increase, the current account
deficit and the crisis in the banking system – the
current recession in the US will not be a mild one.
Instead we can expect something near a deep
recession. This will, of course, have an adverse
impact on the world economy and Europe.
The Ifo Business Cycle Clock from the World
Economic Survey shows Western Europe in a
Kai Carstensen
Head, Business Cycle Analyses
and Surveys Departement,
Ifo Institute, Munich
“Only with government action have we been
able to prevent a system-wide collapse.”
had consequences for the business cycle conditions, in particular in the US. But also in Europe
we see that the credit supply is not flowing as
smoothly as before and it’s becoming more difficult for firms to get new credit.
The second part of the crisis is more structural.
The current account deficit of the US is probably
at the root of the problem. It’s now at roughly
5 percent of GDP, which is really a huge number.
And at the same time house and share prices
have fallen from their peaks, and there is currently no sign that they will stop falling.
What are the consequences of all this? With the
structural imbalances in the US, consumption
in the US and economy-wide borrowing from
abroad will have to come down to a sustainable level. This will require adjustments beyond
the very short term. The US will probably go
through a sustained period of relatively low
growth. This implies that the US will not be the
recession scenario, in other words a situation in
which economic experts tell us that the present
economic situation is bad and will become even
worse in the coming six months. Other indicators also confirm that Europe is currently in a
recession and that we won’t come out of it very
quickly.
As I mentioned at the start, inflation is no longer
a risk. But what about deflation? Are we heading
for a Japanese scenario with very long, sustained
low growth rates and general price deflation? If
we look at the available figures, deflation seems
to be far removed. Current inflation measurements do not indicate this and if we forecast inflation for the coming two years with a baseline
scenario for the euro area of a constant dollar/
euro exchange rate at 1.28, a constant (Brent) oil
price at 57 dollars and price indices for food and
agricultural raw materials constant at their current dollar levels, then inflation in 2009 would
decrease to 2.0 percent. The base effect of the
decline in oil prices will
show in core inflation in
2009. This is a baseline scenario, which of course does
not take into account any
further negative growth
shocks. Using a deflation
risk scenario, projected
inflation for 2009 would be
1.3 percent. So we would
still be safely away from deflation, but inflation would
come down quickly in the
coming year. Overall, the
results of this exercise is
that core inflation – which
is what really matters when
2nd Ifo BrIEF 2008
16
Panel 1
we think about deflation – will come down next
year but it will be safely away from zero and as
a consequence the current deflation discussion
is probably not the main risk for the European
economy. This could of course change if we witness further business cycle shocks, but given the
current situation there is not much risk of deflation, defined as a general and sustained decrease
in prices in the EU.
Let me summarise. There is no inflation problem ahead for the euro area right now. In particular the output slump will relieve the price
pressure we have seen in the previous quarters.
Still, deflation is not really the scenario we
should worry about. But we have bad news on
the business cycle. The US recession and the
state of the world economy will both be problems for the EU economy. We see this in orders
and production and many other indicators for
the EU economy. And as a consequence, if we
use as a benchmark the economic experts that
we survey in Europe, Europe is also currently in
recession, not in stagflation. Prices are not the
problem, output is the problem.
D i scu ssi on
In the discussion, Gerhard Stahl observed that
Europe has regarded the US as the more dynamic economic model with greater flexibility and
productivity. Now with the US entering a period of low growth rates, should Europeans rethink some of the conclusions drawn in the past
and revise some of the EU’s economic policies?
Pervenche Berès replied that the EU in drafting
its Lisbon Agenda tried to tackle the problem of
lower productivity in comparison to the US. This
was one pillar of the Lisbon Agenda. Another
pillar was the emphasis on energy and climate
change adopted in 2007 to help reach the goals
of the Agenda. “The debate today concerns being coherent with what we have adopted. If the
US doesn’t change its model, there’s going to
be a drama. You cannot have an economy that
only lives on debt. At the
time the Lisbon Agenda
was conceived it was to
help Europe catch up
with the US. Today the
Lisbon Agenda presents Europe’s solution
for a better model for
growth.” Kai Carstensen
observed that the regulation of financial markets in the US and some
other features of the US
economy have proven
not to be the right way.
“But still the US economy is a very innovative,
productive and flexible
2nd Ifo BrIEF 2008
economy. Not everything the US stands for is
bad. For Europe too a market economy is the
best system and to function it needs a strong
government that sets the rules and framework.
But we should not make the government a player
in the markets; it’s not a very good player. The
current government participation in banks will
hopefully be just for a limited period of time.”
Pervenche Berès responded that the crisis came
about not because of a lack of regulation but due
to bad regulation. “I fully share the view that
governments are not good shareholders. But
the challenge today is that all the banking rescue plans have been financed by public budgets.
Banks have been rescued so they can fulfil their
mandate – to finance the real economy. If the
governments are giving the banks money, why
shouldn’t they exercise shareholder rights?” She
argued that the government as rescuer of the
banks must have more say regarding issues such
as dividends, executive pay, offshore activities,
long-term investments and SME financing. For
Hans-Werner Sinn the public debate on this issue is very irritating: “It seems to be saying that
we followed the liberal path and it didn’t work,
now let’s try the statist approach. If only it were
that easy. For economists it’s always a problem
of finding the optimum between the extremes.
What is the right amount of government and
private activity and where is the borderline
between these two sectors? The public doesn’t
understand that economists are for labour market deregulation, for flexible wages and prices,
but also for tough banking regulation. This is
not a contradiction. It’s the model on which the
German social market economic order is built.
We have a tough government that sets the rules
but is not itself a player.”
17
P anel 2
E u ro p ean Ta x Policy – Taxat i on of
Mu ltin at iona ls
R o b e r t Ve r r ue
W
hat should the Commission’s contribution
be to helping the European economy
recover? Clearly the main instruments for
stimulating demand and employment are in the
hands of the member states, in particular as
regards short-term developments. But the financial
crisis has also shown the need for international
co-ordination and international regulation.
Since the impact of the credit crisis is being felt
by the real economy, the European Commission
and European Council are developing a strategy
to help limiting the effects on growth and real
expansion. That means pressing ahead with the key
objectives of the Lisbon strategy and reaffirming
the commitment to the development of a strong
dynamic single market, which is the key driver for
economic expansion in the European Union.
The Commission’s initiative in the taxation of
multinationals is of great importance. Multinationals – large or medium-sized companies,
that operate across several member states in the
European Union – still face considerable tax
obstacles in the internal market as it exists today.
They have to comply with up to 27 different tax
codes of which each one is inherently complex and
also subject to ongoing changes. The requirement
compensation for profit and losses. The current
functioning of the corporate tax system in the
EU causes not only over- and double taxation
but additional compliance costs when it comes to
cross-border situations. These obstacles result in
considerable loss in economic efficiency.
Of course without the internal market with
its freedoms, the drive and functioning of
multinational companies would be tremendously
more difficult. However, today we do not
exploit the full potential of the internal market,
particularly within the tax domain. And albeit it
is up to each individual member state to shape
a proper tax environment, i.e., an environment
which is conducive to competitiveness, growth
and jobs, the EU can play a useful and important
supportive role, perhaps a more sophisticated role
that one may think. Despite the widespread feeling
that Brussels wants to harmonise everything,
the Commission does not want to harmonise
anything for the sake of harmonisation. It prefers
harmonisation only in specific fields where it is
supposed to result in a better functioning of the
internal market. Regulations and directives do
have their place but they are not always the best
way to achieve the objectives. Frequently much
Robert Verrue
Director-General,
Taxation and Customs Union
Directorate-General,
European Commission, Brussels
“Today we do not exploit the full potential of the internal market, particularly within the tax domain”.
to apply separate entity accounting to integrated
corporate groups gives rise to costly transferpricing obligations and the absence of cross-border
greater emphasis is put on soft laws, co-ordination
and co-operation. If harmonisation and coordination of national policy can be achieved
without legislation, so
much the better. But in
some cases legislation
would clearly and will
clearly continue to be the
best available option.
There are several initiatives
put
forward
by European institutions that helped to
achieve significant progress in the taxation
domain. One is the
amended merger directive
that made cross-border
economic
restructuring
much easier and con-
2nd Ifo BrIEF 2008
18
Panel 2
sequently permitted companies to react more
quickly to market developments. Another example
is reducing or eliminating double taxation in
cross-border business. Here progress towards
this aim has been achieved with our proposal
for a code of conduct on the way the arbitration
conventions should work. This was based on the
work of the EU Joint Transfer Pricing Forum,
which brings together transferring pricing
experts from the private sector and national fiscal
authorities. Thanks to this soft law initiative the
member states have agreed to effectively eliminate
double taxation within three years and they have
committed themselves to ensuring that during the
resolution of cross-border disputes, tax collection
can be suspended under the same conditions as in
domestic appeals and litigation. A third example
is simplifying the tax system in order to reduce
compliance costs. To simplify compliance with
VAT regulations, the Commission has proposed
a amendment to the 6th VAT Directive. A onestop shop system would allow traders to fulfil
all their obligations for all EU-wide activities in
the member states where they are established.
Traders would use a single VAT number for all
supplies throughout the EU and make their
VAT declaration via a single electronic portal.
The declaration would then be submitted
automatically to the various member countries
where the traders supply goods and services.
with those of the other member states and with
the EC treaty. The aim is not to lay down uniform
harmonised tax rules at a community level. What
is needed is a co-ordination of tax rules in such
a way that member states achieve their national
policy objectives in compliance with community
law. Co-ordination should ensure that member
states eliminate discrimination and international
double taxation, both of which have no place
in a true single market. It can also eliminate an
intentional double taxation and can strengthen
tax systems against tax avoidance and evasion.
Therefore in 2006 the Commission launched a
framework initiative which was followed up by a
number of more specific initiatives with the aim to
ensure that member states direct tax rules would
not only be in compliance with the EC treaty
obligations but also with each other. This is a
comprehensive tax policy initiative to respond to
problems posed by the interaction of 27 national
tax systems.
”Co-ordination should ensure that member
states eliminate discrimination and
international double taxation“.
In the longer term the most ambitious and most
significant measure would be the introduction of
a common consolidated corporate tax base for
all EU-wide activities. Here the harmonisation
would only cover the tax base, not the tax rates.
Setting rates should remain in the competency of
member states. A common consolidated tax base
would, however, promote transparency, clarity
and simplification. It would bring a significant
reduction in compliance costs. It would also allow
cross-border offsetting of profits and losses, and it
would remove most of the tax obstacles to crossborder activities and the restructuring of groups
of companies in the internal market. Commission
services have completed a considerable amount of
work on the Common Consolidated Corporate
Tax Base (CCCTB) proposal and have benefited
from the highly valuable input from member state
experts and other interested parties in conducting
this project. They are now in the process of
preparing the final steps of the detailed impact
assessment and are drafting a comprehensive
proposal for legislation.
In the short term the main priority is to help
member states make their tax systems compatible
2nd Ifo BrIEF 2008
Panel 2
19
T h i e s s Bü t tn e r
M
y presentation this afternoon is aimed at
showing you what will happen if there
is no European policy on taxation and if no
co-ordination is achieved. There is a common
perception in Europe that large corporations
manage to pay little or no taxes. The Finance
Committee of the German Parliament, for example, expressed this view in 2007: “As a consequence of the high tax burden, internationally
operating firms arrange their profits in a way
that a substantial part is taxed in countries with
lower tax rates.” This is an important issue and
it involves the “tax planning” that corporations
undertake. Larger firms are also perceived as receiving preferential treatment over small firms,
which are not in a position to engage in this sort
of tax planning. This of course raises equity
concerns. A smaller company has to pay higher
taxes and at the same time compete with larger
firms that are paying less tax.
The question confronting tax policy-makers is
whether something can be done about tax planning. Are there instruments to restrict tax planning and how should they be used? I would like
to use the example of tax legislation in Europe
to show that there are some tools for restricting
the tax planning of multinationals. But I will
also look at the possible adverse implications of
these measures for investment.
be looking at the emergence of firms that have
very little equity, perhaps for tax reasons, and
how governments have responded to this with
thin capitalisation rules. I will look at empirical
evidence to see if these rules are effective in restricting tax planning as well as what effect they
have on investment.
One important element in multinational corporations’ tax planning is related to the financial
structure. While the taxation of corporate profits generally results in an incentive to use debt
instead of equity, multinationals can adjust the
financial structure not only by means of external
debt but also internally by using inter-company
loans to and from foreign affiliates. Faced with
an increased ability of multinational corporations to use debt finance, governments often respond by imposing thin-capitalisation rules. A
general characteristic of theses rules is to limit
interest deduction if the debt-to-equity ratio of
an affiliate is above a certain threshold.
Thiess Büttner
Head, Public Finance Department,
Ifo Institute, Munich
These rules are very much in vogue, but there is
not much evidence on the consequences of these
rules and whether they are effective.
The first question we ask is: If a country applies
or tightens these rules, do we see a significant
response in the capital structure of the foreign
firms that are active in the country. Here our
“A smaller company has to pay higher taxes and
at the same time compete with larger firms
that are paying less tax.”
I will look at one specific detail of international
tax law that is currently on the agenda in some
countries. I will examine thinly capitalised
firms, and more specifically at firms in the producing sector and not the financial sector. I will
analysis shows that these rules are indeed associated with a significant reduction in firms’ use
of internal debt.
Our second question: Are these rules really a
means to reduce the tax
incentive for capital structure choice and can we really remove the tax-planning incentive? The results
of our study confirm that
thin-capitalization restrictions effectively remove the
incentive for tax planning
by means of inter-company
loans.
The third question concerns
the impact on investment.
We have evidence that investment strongly responds
2nd Ifo BrIEF 2008
20
Panel 2
to anti-tax-planning measures or thin capitalisation rules. The results are sizable. Investment
declines when these rules are in place; if they
are removed, the estimate is that foreign investment will increase by five percentage points in
the short run and by a higher rate in the long
run. Tax policy thus faces the trade-off between
limiting multinationals’ tax planning and the
negative impact on investment.
What can we conclude from these fi ndings?
First we must acknowledge that the uncooperative tax policies that we have in Europe force
countries to implement thin capitalisation rules.
Discussions are in progress in Europe to change
this situation, but the current situation forces
countries to impose these restrictions. The
tax-induced capital structure adjustment that
fi rms undertake in response to the current tax
situation is quite costly. This means that there is
high “collateral damage” of thin capitalisation
rules. What we also see is that the continuation
of national attempts to protect taxable earnings
leads to a rather costly and complex tax system
in Europe.
The longer it takes for Europe to fi nd a coordinated or at least cooperative approach to taxing
“Tax policy thus faces the trade-off between
limiting multinationals’ tax planning and the
negative impact on investment.”
corporations in Europe, the more the phenomenon we are describing will flourish. It is thus
very important that we have a discussion on a
common, consolidated tax base. The results of
our study suggest that this would bring about
large efficiency gains. Fortunately, we now have
a large body of academic literature on a common, consolidated tax base, which raises the
hope that academic research and European
policy may be moving in the same direction and
that a more effective solution to this problem
will be found.
2nd Ifo BrIEF 2008
example shows that you can have an extensive
social model and at the same time be highly competitive. And this is the challenge we now have to
face in the European Union.
Ap p e nd i x
22
Appendix
Pro gra mme
D e spe rate R e m ed ies: Lesso n s fro m t h e C r isis
10.15 am
Welcome Addresses
Hans-Werner Sinn
President, Ifo Institute, Munich
Gerhard Stahl
Secretary-General, Committee of the Regions, Brussels
10.30 am
I nt rod uc tor y D eb ate
Financial and Economic Crisis:
Causes and Consequences
Joaquín Almunia
Commissioner for Economic and Monetary Policy,
European Commission, Brussels
Hans-Werner Sinn
President, Ifo Institute, Munich
Discussion
12.15 pm
2nd Ifo BrIEF 2008
Lunch
Appendix
1.15 pm
23
Pa n el 1
Stagflation Ahead?
Output Slump and Excess Inflation in Europe
Pervenche Berés
Chairwoman, Committee on Economic and
Monetary Affairs, European Parliament, Brussels
Kai Carstensen
Head, Business Cycle Analyses and Surveys Department,
Ifo Institute, Munich
Discussion
2.45 pm
Coffee Break
3.00 pm
Pa n el 2
European Tax Policy – Taxation of Multinationals
Robert Verrue
Director General, Taxation and Customs Union
Directorate–Gerneral, European Commission, Brussels
Thiess Büttner
Head, Public Finance Department, Ifo Institute, Munich
Discussion
4.00 pm
Concluding Remarks
Hans-Werner Sinn
President, Ifo Institute, Munich
2nd Ifo BrIEF 2008
24
Appendix
BrIEF Org an is er s
T
Committee of the Regions
he Committee of the Regions (CoR) is the
political assembly that provides local and
regional authorities with a voice at the heart
of the European Union. Established in 1994,
the CoR was set up to address two main issues.
Firstly, about three quarters of EU legislation
is implemented at the local or regional level, so
it makes sense for local and regional representatives to have a say in the development of new
EU laws. Secondly, there were concerns that the
public was being left behind as the EU steamed
ahead. One way of closing the gap was involving the elected level of government closest to the
citizens.
The European Treaties oblige the Commission
and Council to consult the Committee of the
Regions whenever new proposals are made in
areas that have repercussions at the regional
or local level. The Maastricht Treaty set out
five such areas – economic and social cohesion, trans-European infrastructure networks,
health, education and culture. The Amsterdam
Treaty added another five areas to the list – employment policy, social policy, the environment,
vocational training and transport – which now
covers much of the scope of the EU’s activity.
Outside these areas, the Commission, Council
and European Parliament have the option to
consult CoR on issues if they see important regional or local implications to a proposal. CoR
can also draw up an opinion on its own initiative, which enables it to put issues on the EU
agenda. There are three main principles at the
heart of the Committee’s work.
Ifo Institute for Economic
Research at the Universitiy
of Munich
Subsidiarity. This principle, written into the
Treaties at the same time as the creation of CoR,
means that decisions within the European Union
should be taken at the closest practical level to
the citizen. The European Union, therefore,
should not take on tasks that are better suited to
national, regional or local administrations.
Proximity. All levels of government should aim
to be close to the citizens, in particular by organising their work in a transparent fashion, so
people know who is in charge of what and how
to make their views heard.
Partnership. Sound European governance
means European, national, regional and local
government working together – all four are indispensable and should be involved throughout
the decision making process.
2nd Ifo BrIEF 2008
T
he Ifo Institute, founded in January 1949,
derives its name and purpose from two
words: Information and Forschung (research).
The Ifo Institute is one of the leading economic
research institutes in Germany and the one most
often quoted in the media. A co-operative agreement links it closely with the Ludwig Maximilian
University (LMU) in Munich, and in 2002 it was
officially proclaimed an “Institute at the University
of Munich”. The Ifo Institute is a member of the
Leibniz Association and its research funding is
anchored in the German constitution.
Mission and tasks
The Ifo Institute is an independent and competent
• producer of data and information on the national and international economic situation and its
development, which is in great demand in industry, in government and by the public,
• a driving force and impetus-giver for the debate on
economic policy in Germany and Europe, as well as
• an internationally oriented centre of empirical
economic research.
The tasks of the Ifo Institute are threefold:
Services for researchers, business, government
and the general public
The Ifo Institute dedicates a large part of its capacity to economic-policy services, including
the compilation, processing and the provision of
economic data and information, the compilation
of material for the comparison of international
institutions within the framework of DICE –
the Database for Institutional Comparisons in
Europe – and the collection and processing of
other macroeconomic data.
Applied economic research
The Ifo Institute acts as a mediator between university research and the general public, including the
media, by applying theoretical knowledge gained
from its compiled economic data to practical economic policy.
Policy consulting for the public and private sectors
The Ifo Institute uses its database and research
competence to participate in the public debate on
economic policy and reform concepts.
National and international co-operation partners
The Institute fosters the exchange of ideas
with institutions, universities and researchers throughout the world. Apart from its
close ties to LMU, co-operation with its
other partners also enriches the work of the
Institute. Numerous networks have been created
from project co-operations.
© Ifo Institute for Economic Research at the University of Munich
Publisher:
Ifo Institute
Editors:
Paul Kremmel
Jutta Albrecht
Photography:
Romy Bonitz
Layout and design:
Jasmin Tschauth, Elisabeth Will and Kinga Bien
Printing:
Majer & Finckh, Stockdorf
Conference venue:
Committee of the Regions
Bâtiment Jacques Delors
Room: JDE 51
Rue Belliard 99–101
1040 Brussels
Belgium
Contacts:
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Ifo Institute for Economic Research
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Mail: [email protected]
Annette Hagemann
Committee of the Regions
Tel. 00 32/22 82-20 09
Mail: [email protected]
2nd Ifo BrIEF 2008
2nd Ifo BrIEF
Ifo Brussels International Economic Forum
Desperate Remedies:
Lessons from the Crisis
11 November 2008
Institute
for Economic Research
at the University of Munich