Climate protection and conventional municipal fiscal equalisation do not match. This somewhat sobering finding from the study conducted by FiFo Köln together with Thomas Döring (sofia Darmstadt) for the Land North Rhine-Westphalia prompts us to take an innovative approach. With the climate impact approach, we present a concept - not yet ready-to-use - for combining targeted municipal climate protection, modern fiscal performance orientation and the reduction of administrative burdens. In its second focus, the study analyses the advantages and disadvantages of multi-year tax capacity measurement in fiscal equalisation. The German Report is published today as FiFo Report No. 34.

The European Union needs to become more capable - also, but not only, for future enlargements. Cohesion policy is still part of the problem. However, it can become more part of the solution again, argues Michael Thöne, once the fiscal architecture of cohesion policy is openly acknowledged in its function also as a European financial equalisation and refined in a more subsidiary manner. The paper is published simultaneously in German as FiFo Discussion Paper 24-02 and in English as ZEW Discussion Paper 24-038.

The people in small towns identify particularly strongly with their companies, and the companies with their towns. Often, both face the same challenges: Skilled labour, housing, local transport. Nevertheless, there is less co-operation than is possible and sensible. This potential can be mobilised with the KOWIS approach, a concept for cooperative urban development in small towns developed by FiFo, GGR and IW Consult. The German report is now available as a BBSR publication.

The size of the government has a causal and positive effect on economic growth. In the new FiFo Discussion Paper 24-1, FiFo Policy Fellow Carsten Colombier uses a panel data set from 1880 to 2016 for 17 industrialised countries to show that the real world and growth theory do not always align. However, the positive growth effect is small and does not apply to any given kind of government spending. Obviously, it remains important to strengthen the efficiency and quality of public finances.

⁠Meeting the global Sustainble Development Goals seems increasingly out of reach. Their funding is too scarce and unreliable. How could additional financing sources - especially taxes - ensure those needs are fulfilled? What criteria should be taken into account? In a ‘Deep Dive’ at the Global Solutions Summit 2024 at ESMT Berlin, Michael Thöne discusses the prospects of the emerging concept with Quentin Parrinello, José Siaba Serrate and Christian Kastrop.

No matter what the future debt brake may look like, public budgets must be consolidated qualitatively in order to maintain fiscal sustainability and the power to govern. This also means cutting out old habits. ‘That means action. We don't have a knowledge problem,’ states Michael Thöne in the Handelsblatt cover story on the reduction of subsidies and tax breaks. If everyone has to swallow bitter pills, it becomes politically easier and 20 billion euros or more can be generated each year. Tagesspiegel, Focus, The Pioneer and Welt (paywalls in some cases) also report on this.

Demographic change, digitalisation and the climate neutrality goal are putting Germany's economy through a great transformation. Maintaining and strengthening our model of value creation is crucial - but not easy in times of increasing labour shortages. In the Böll Foundation's Economic Atlas, Michael Thöne writes that immigration, AI and smart, not reality-shy policy-making can be part of the solution. Listen to the podcast here.

The KDZ Centre for Public Administration Research has appointed Michael Thöne to its Advisory Board. The KDZ in Vienna is an institute that is as rich in tradition as it is forward-thinking, bringing together research and practice for excellent scientific policy advice. "I am very much looking forward to the deepened exchange with the KDZ and the other trustees from Austria, Switzerland, Germany and South Tyrol," says the FiFo Director, expressing his gratitude for the honour.

The survey "NRW.BANK.Fokus Kommunen" enters its second year. In addition to investments and climate change, this edition focuses on the retention of skilled labor. We warmly invite all financial decision-makers of the municipalities to contribute their perspectives through the survey. The results will be published in August 2024 in an anonymized research report.

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