1. Home
  2. Studies
  3. Effective aid programs in the energy price crisis: Proposals for more liquidity in private households and companies
Tobias Hentze / Michael Hüther IW-Policy Paper No. 5 24. September 2022 Effective aid programs in the energy price crisis: Proposals for more liquidity in private households and companies

The energy price crisis is a huge challenge for economic policy. With the three relief packages, the government has given some important support, but the economic policy lacks a stringent line. All measures should currently have the top priority to secure liquidity for private households and companies over the winter.

Download PDF
Proposals for more liquidity in private households and companies
Tobias Hentze / Michael Hüther IW-Policy Paper No. 5 24. September 2022

Effective aid programs in the energy price crisis: Proposals for more liquidity in private households and companies

German Economic Institute (IW) German Economic Institute (IW)

The energy price crisis is a huge challenge for economic policy. With the three relief packages, the government has given some important support, but the economic policy lacks a stringent line. All measures should currently have the top priority to secure liquidity for private households and companies over the winter.

To that end, simple and effective tools are the way to go. Intervening in price mechanisms or changing the market design can lead to unexpected distortions and should therefore be carefully considered. Therefore, the approach of making direct payments to private households and companies that are as targeted as possible is reasonable. In the case of low-income private households, this must be done through non-repayable grants. For companies, on the other hand, liquidity aids are the first choice.

In addition to loans, the tax policy offers potential to increase liquidity without risking excessive subsidies or creating high free-rider effects. Like the corona pandemic, politicians should give companies generous deferral options for income and sales taxes and, for this purpose, partially reimburse advance payments already made. At the same time, the options for offsetting tax losses should be expanded.

The introduction of a negative tax as a simple procedure to support the solvency of companies would be consistent and an opportunity for a structural improvement in case of future crises.

Download PDF
Proposals for more liquidity in private households and companies
Tobias Hentze / Michael Hüther IW-Policy Paper No. 5 24. September 2022

Effective aid programs in the energy price crisis: Proposals for more liquidity in private households and companies

German Economic Institute (IW) German Economic Institute (IW)

More on the topic

Read the article
The Challenges to the Sustainability of Germany’s Public Finances
Martin Beznoska / Tobias Hentze / Katja Rietzler / Martin Werding IW-Trends No. 3 24. August 2023

The Challenges to the Sustainability of Germany’s Public Finances

The German government’s fiscal responses to the Covid-19 pandemic and the Ukraine war in an attempt to cushion their impact have driven up the country’s general government debt-to-GDP ratio.

IW

Read the article
Beznoska, Martin / Christian von Haldenwang / Ruth Maria Schüler in IDOS (Hrsg.) Discussion Paper External Publication 15. March 2023

Tax expenditures in OECD countries: Findings from the Global Tax Expenditures Database

The Global Tax Expenditures Database (https://GTED.net/) collects national reports on tax expenditures for 101 countries for the period from 1990 to the present. Based on these data, the development of tax expenditures in the 38 OECD countries between 1999 and ...

IW

More about this topic

Content element with id 8880 Content element with id 9713