Economists Panel on Germany’s coronavirus economic policy

Almost half of participating economists are either “fairly dissatisfied” (27 percent) or “very dissatisfied” (20 percent) with Germany’s current coronavirus economic policy.

02.03.2021 · Economics, Social Sciences, Spatial Research · ifo Institute - Leibniz Institute for Economic Research at the University of Munich · News · Research result

Almost half of participating economists are either “fairly dissatisfied” (27 percent) or “very dissatisfied” (20 percent) with Germany’s current coronavirus economic policy. This is a finding from the latest Economists Panel, a survey of economics professors at German universities by the ifo Institute and Frankfurter Allgemeine Zeitung. Another 30 percent of answers were “undecided.” About 20 percent said they are “fairly satisfied” with the coronavirus economic policy, while 2 percent are “very satisfied.” A total of 177 economists took part in the survey.

“The results of the new Economists Panel suggest that there’s plenty of room for improvement in coronavirus economic policy,” says Niklas Potrafke, Director of the ifo Center for Public Finance and Political Economy. The participants said that policymakers are responding too slowly and too rigidly, and that there are no concrete plans for opening up the economy again. They said that aid for companies is too bureaucratic and that the vaccination strategy to date has largely failed. “According to respondents, paying premiums to vaccine manufacturers who produce additional vaccine and deliver it quickly is a particularly appropriate measure,” Potrafke says.

Responses to the premium proposal were “very positive” for 45 percent of respondents and “fairly positive” for 21 percent; 16 percent were “ambivalent,” 9 percent were “fairly negative,” and 5 percent were “very negative.” Proponents justified their opinion, among other things, with the fact that the social costs of the pandemic dwarf everything else and that the price premiums are small in comparison.

The economists take a critical view of the communitization of patents with compensation payments to patent holders. A full 32 percent see this as “fairly negative” and 25 percent as “very negative.” Meanwhile, 12 percent are “ambivalent,” 13 percent see it as “fairly positive,” and 12 percent as “very positive.” Those who disapprove say that the added value of communitization is not clear, because licensing is already a possibility. In any case, manufacturers themselves already have an interest in supplying as much vaccine as possible. Another reason is for disapproval that the incentive to research must not be diminished, and that this requires the protection of intellectual property.

There is strong approval for the announced expansion of testing. Of participants, 52 percent see this as “very positive” and 27 percent as “fairly positive.” Meanwhile, 10 percent are “ambivalent,” 4 percent consider it “fairly negative,” and 3 percent say it is “very negative.” Proponents said that this would make it possible to open the economy up again without increasing infections.

Lowering the threshold for weekly infections from 50 to 35 per 100,000 of the population is seen by economists as “very positive” (20 percent) and “fairly positive” (29 percent). Meanwhile, 9 percent are “ambivalent,” 22 percent consider it “fairly negative,” and 19 percent think it is “very negative.” The rationale is that the new figure is appropriate because the mutations of the virus are more contagious than its previous form. One criticism is that the new threshold is “arbitrary.”

Economists were divided on the question of whether an immediate and complete lifting of the lockdown would reduce the number of insolvencies: 43 percent answered “no,” 35 percent “yes,” and 22 percent “don’t know.” Respondents who answered “no” specifically pointed out that an immediate reopening would trigger a third wave of the disease – with correspondingly detrimental effects on the economy.

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