Growth and Cycles
The comprehensive analysis of the macro-economic core variables such as production, employment, unemployment, and inflation, forms an indispensible background for the analysis of individual sectors and markets, for describing the economic prosperity of selected parts of the population, and for the evaluation of the effectiveness and efficiency of economic policy measures. Furthermore, analyzing long term growth trends and identifying the drivers of growth lead to a large number of highly demanding research questions. Finally, the public and the political sector expect competent evaluation and interpretation of macroeconomic phenomena, especially from an institute of economic research. For all these reasons the macroeconomic analysis is one of the core area of research at RWI – comprising much more than a solid description of present economic developments, which is often identified with the essence of economic research in the public discussion.
The dual character of economic research – the interpretation of human behaviour under the condition of scarcity and the prediction of future developments – is reflected most clearly in the work of the research division “Growth and Cycles”. The non-stationary nature of economic development to be examined in this context is a fundamental methodical challenge for empirical macroeconomic analysis. Although economic activity typically increases in the course of time, it does not follow a primitive or easily recognizable pattern. On the contrary, economic growth is accompanied by genuinely complex fluctuations of economic activity so that a forecast of future developments and evaluation of the effectiveness and limitations of economic policy measures aimed at stabilizing and improving growth potentials result in further significant research topics and questions.