Growth and Cycles

Research Focus

Business Cycle Analyses and Forecasting

Analyses of short term economic movements and short term forecasts make up an important part of the scientific policy advice and they very much coin the public perception of the institute. Two detailed reports per year provide a comprehensive description of the economic situation in the world and in Germany and forecast. They form a basis for the institute’s participation in the “joint forecast” on behalf of the German Ministry of Economics.

Simulations with the RWI business cycle model on the impact of policy measures form an input to policy decisions, and they feed into comments on current economic issues. Analyses and forecasts thus receipted in the public require a solid empirical and methodological basis. Therefore the development of the analytical instruments has a high rank in the research agenda. The research topics range from developing new – e.g. internet-based – indicators for the short term analyses and advancements in the RWI business cycle model to new approaches that allow an integrated analysis of short term fluctuations and medium term trends.

Long-term Economic Development

Short-term and long-term economic trends are linked in many aspects. Higher private and public investments, for instance, stimulate demand in the short run, but at the same time they contribute to higher production capacities and thus enhance growth. One focus of the research on long term growth therefore is to integrate business cycle and growth models to overcome the artificial separation of these phenomena that prevail in macro-economics. The research aims at using this new type of models for the institute’s medium term forecasts, not at least because the joint analysis of short term and long-term effects of policy measures is highly relevant for scientific policy advice. A second research focus is on the consequences of demographic and social change on economic growth.