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International Institute of Public Finance

Press Release

8 August 2012

Ways Out of the Public Debt Crisis - Public Finance Global Meeting in Dresden

In the framework of the 68th annual meeting of the "International Institute of Public Finance", the world public finance organisation, over 400 German and international public finance experts will be gather at the Technical University of Dresden from 16th-18th of August to debate ways out of the public debt crisis at an event entitled: "Public Finance, Public Debt and Global Recovery".

Speakers include Alberto Alesina, Harvard University, Christoph Schmidt, member of the German Council of Economic Experts and President of the RWI, Laurence Kotlikoff, Boston University, Assaf Razin, Tel Aviv and Cornell University (NY), and Jim Hines, University of Michigan.

Alesina sees government spending cuts as the right way to go about putting government budgets back in order, and supports his argument using research results on historical adjustment measures in OECD countries.

Christoph Schmidt fears that the window for reforms in the Eurozone is set to close soon. In his view, the euro crisis can only be overcome if the members of the euro area are prepared to accept temporary mutualisation of their debt and link this to tough conditions for consolidation, old debt repayment and structural reform.

The USA also needs radical fiscal reforms, explains Laurence Kotlikoff. He even sees an end to the American dream if the USA does not finally put a stop to the policy of accumulating debt to be paid off by future generations that it has been pursuing for decades. While 15% of national product was saved back in the 1950s, the savings rate in the USA has now fallen to zero. A lack of investment will strangle US growth, explains Kotlikoff.

Assaf Razin still believes that the US has an advantage over Europe. For the US attracts highly qualified workers from all over the world, leaving it much better positioned for the future than Europe, where "welfare migration" still tends to dominate.

Jim Hines expects long-term erosion in corporate taxation in industrialised countries. In view of massive public budget deficits and highly robust corporate profits, governments should really use corporation tax to generate tax revenues. Yet fear of labour market collapses is prompting governments to cut corporate taxes.

Alongside the current economic and financial crisis, around 300 presentations will cover all aspects of public finance - from taxation and social policy to environmental and climate policy. The meeting is supported by Ifo Dresden, a branch of the Munich-based Ifo Institute, and co-organised by Prof. Dr. Marcel Thum, Executive Director of Ifo Dresden.

The "International Institute of Public Finance" was founded in Paris in 1937 and is headquartered at the Ifo Institute in Munich. The world public finance organisation has a membership of around 800 researchers from over 50 countries. For more information, please consult info@iipf.org.

Prof. Dr. Marcel Thum
Ifo Dresden
Einsteinstr. 3
01069 Dresden
Phone: +49 (0)351 26476-0

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