Our task: Showing perspectives for an european Social Market Economy
To make sure that the Social Market Economy persists, we think beyond short-term system corrections. The question is how economic circumstances and parameters of the political competition create incentives to discover and to consider the citizens‘ interest on the long run. We take into account that individuals do not always behave according to the classical model of economic behavior. Therefore we promote fundamental research projects which are based on econometric, experimental, descriptive-empirical as well as qualitative methods.
Informing economic policy by studying individual decision-making
Societal and institutional change implies that actors need to adapt to novel restrictions. The German reunification or the financial crisis are examples of extraordinary situations which pose a challenge to actors‘ beliefs, institutions and behavior. To assess how people decide under changing social and economic conditions, we require knowledge about the factors that influence decision-making. Neoclassical theory assumes that actors easily adapt to new constraints and that preferences, i.e., the evaluation of given options, remain unaffected. However, research in behavioral economics shows that individuals’ behavior often contradicts the predictions of neoclassical theory. Using traditional as well as behavioral economic approaches, we study how individuals react to different incentives. The ultimative goal is to gain insights for economic policy.
Fiscal policy for the federal, the european and the global competition
The fiscal disruptions in the wake of the Great Recession and the Euro crisis have painfully reconfirmed that public debt can abruptly turn into a heavy burden The looming threat of sovereign debt default has raised the questions of fiscal sustainability and adequate measures to alleviate public deficits in many countries throughout the world. These issues are particularly urgent since new challenges for public finances arise from demographic changes. In addition, fiscal policy is not without relevance for the success in the international competition for mobile factors of production. Thus, the Walter Eucken Institute is committed to empirical research in the areas of fiscal sustainability and fiscal institutions. In addition, the scientists at the Walter Eucken Institute deal with questions concerning the relation between fiscal policy and competitiveness and the appropriate structure of the state for a successful federal competition.
Theory historical studies about the origin of the ordoliberal thinking
The Freiburg tradition developed from a variety of currents in the history of ideas. Their description and critical assessment can offer important insights for contemporary debates. An important focus of research is the formation of the Social Market Economy and its significance for today’s economic and social policy. The Institut also cooperates with renowned scholars in the history of economic thought to continue research on important members of the Freiburg School.