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Jena, Germany

The Max Planck Institute of Economics was founded in 1993 as the Max Planck Institute for Research into Economic Systems . Its initial mission was researching the transition of the former Eastern European socialist economic systems, but it now researches a broad set of problems relating to change in modern economies more generally, including evolutionary economics, experimental economics, and entrepreneurial studies. The institute is one of 80+ research institutes of the Max Planck Society and is located in Jena.It is organized into three research units: Evolutionary Economics Group , Strategic Interaction Group Entrepreneurship, Growth and Public Policy Group . The institute is located in the Kahlaische Strasse, about 1 km south-east of the city centre. It is housed in an attractively restored Victorian villa, linked by a glass bridge to a much larger modern building, which includes offices and other facilities for each of the research units, each unit having one floor of the main section of the building. In addition the new buildings include a substantial library, and apartments where visitors to the institute can be accommodated. Wikipedia.

Witt U.,Max Planck Institute of Economics
Environmental Innovation and Societal Transitions | Year: 2011

Strong growth in disposable income has driven, and is still driving, consumption to unprecedented, but not sustainable levels. To explain the dynamic interplay of needs, need satisfaction, and innovation underlying that growth a behavioral theory of consumption is suggested and discussed with respect to its implications for making a transition to more sustainable patterns of consumer behavior. © 2011 Elsevier B.V. All rights reserved. Source

Lades L.K.,Max Planck Institute of Economics
Journal of Evolutionary Economics | Year: 2013

This paper presents a formal model in which differential satiation dynamics of various consumer needs explain (not only describe) the shapes of Engel curves. In the model, individuals allocate their income to various consumption categories proportional to corresponding need deprivation states, a decision making process called matching. The model allows explaining some empirical regularities that other models have difficulties accounting for. It can, for example, reconstruct that income elasticities for food tend to decrease with rising income, and that goods that are luxuries at relatively low income levels can become necessities at higher income levels. Moreover, the paper compares the Engel curves obtained from the matching model with Engel curves obtained from a utility maximization model. While both types of Engel curves are relatively similar at high income levels, at lower income levels matching and maximization lead to very different allocations of income. The paper shows that a given amount of income redistribution leads to less additional welfare when individuals follow matching behavior than when they maximize their utility. Accordingly, to obtain a given amount of additional welfare more income redistribution is needed than a policy maker who (mistakenly) assumes that individuals rationally maximize their utility predicts. © 2013 Springer-Verlag Berlin Heidelberg. Source

Witt U.,Max Planck Institute of Economics
Environmental Innovation and Societal Transitions | Year: 2013

The present crisis is a financial crisis only at the surface. In actual truth there is a much more consequential growth crisis behind it. This "view point" discusses why this is so and what consequences follow from this diagnosis when seeking for remedies for the crisis. Particular attention is given in the discussion to the fact that the crisis occurs just at a time when the necessity to cope with the climate change is getting ever more pressing. © 2012 Elsevier B.V. All rights reserved. Source

Matthey A.,Max Planck Institute of Economics
Journal of Cleaner Production | Year: 2010

If resource consumption is to be reduced through economic "de-growth", individuals in industrialized countries may have to accept a reduction in their consumption levels. In democratic societies, implementing this process requires the consent of a majority of the population. However, as long as people have high reference levels of consumption, lower consumption will induce feelings of loss, and hence evoke resistance. This paper summarizes recent experimental evidence on some of the factors that determine the utility costs involved in decreasing consumption. The results suggest that the acceptance of economic de-growth would be facilitated if people's material aspirations were moderated, and the extent to which material achievements are emphasized in our daily environment were reduced. An analysis of the financial and economic crisis that developed during 2008 suggests that it will not contribute to either of these points. Rather, by increasing the public's focus on the economic sphere even beyond pre-crisis levels, it may lead to a further decrease in the acceptance of de-growth policies in the population. © 2009 Elsevier Ltd. All rights reserved. Source

Gross C.,Max Planck Institute of Economics
Energy Economics | Year: 2012

The rapidly growing literature on the relationship between energy consumption and economic growth has not univocally identified the causal relationship yet. We argue that bivariate models, which analyze the causality only at the macro level, are eventually misleading, especially in cases where both variables do not cover the same scope of economic activity. After discussing appropriate pairs of variables, we investigate Granger causality between energy and growth in the U.S. for the period from 1970 to 2007 for three sectors, industry, commercial sector, transport, as well as on the macro level. Using the recently developed ARDL bounds testing approach by Pesaran and Shin (1999) and Pesaran et al. (2001), we find evidence for unidirectional long-run Granger causality in the commercial sector from growth to energy, as well as evidence for bi-directional long-run Granger causality in the transport sector. The dependence of causality on the level of aggregation is interpreted as evidence for 'Simpsons' Paradox'. The choice of control variables is based on findings from the Environmental Kuznets Curve literature: we find that controlling for the increasing energy productivity of production as well as trade significantly improves the fit of the bivariate model. © 2011 Elsevier B.V. Source

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