Dr. Carsten Colombier
Since 2002, Dr. Colombier has been working as a researcher and adviser for the Swiss Ministry of Finance (Federal Finance Department Switzerland). He graduated from the University of Dortmund, Germany, in 1993 with a Master’s degree in economics. He was a research assistant from 1994 to 2000 to the chair of public economics and business taxation of the Bergische Universität Wuppertal, Germany, and from 2000 to 2002 at the KOF Swiss Economic Institute of the ETH Zurich, Switzerland. He obtained his doctorate in 1999. In 2010, he was appointed as a FiFo Policy Fellow at the FiFo – Institute for Public Economics of the University of Cologne, Germany. Dr. Colombier’s specialization is in the fields of public and health economics, and macroeconomics. In his Ph.D. thesis, Dr. Colombier developed a consistently designed economic concept of public intermediate goods, such as infrastructure or foundational research. His current research explores the economic impact of fiscal policy and questions surrounding fiscal sustainability. Related areas of his research are fiscal rules, Baumol’s cost disease, currency areas, and the fiscal sustainability of health systems.
Why did you become a member of the International Atlantic Economic Society?
In 1999, I presented a part of my Ph.D. thesis on public intermediate goods at the IAES conference in Vienna and received valuable feedback. What I especially liked, and still do, is the out-of-the-box thinking of the IAES-conference attendees and their heterogeneous cultural and economic backgrounds. I appreciate very much the ‘hands-on’ approach of the IAES that focuses on the intersection of economic theory and policy.
What types of projects/research are you currently working on and what inspired/motivated you to pursue these interests?
What intrigues me is how the interaction of markets and governments can serve the common good in capitalist economies and how to design an economic policy to achieve this goal. I feel very much inspired by distinguished economists such as William J. Baumol, John Maynard Keynes, and Joseph E. Stiglitz. In particular, I share their view that economics is, rather than being a formal science such as mathematics, an empirical science such as physics. One of my current projects deals with the question of how to align the goal of fiscal sustainability of health systems with equal access and high quality of healthcare. I devote further research to the analysis of the determinants of public expenditure with a focus on Baumol’s cost disease and fiscal rules. Closely related to the former is my ongoing analysis of the growth impact of government activity.
What advice would you give to someone who is considering entering your line of work/field of study?
Speaking as a public and applied economist, I would advise keeping an eye on the complexity of the economy. Thus, I think one can benefit a lot from a sound macroeconomic and institutional background. In my view, economic theories should undergo careful scrutiny in light of empirical evidence. For newcomers to this field, I recommend abstaining from the inclination to provide policy advice straight from economic theory. The failure of mainstream economics to foresee the Global Financial Crisis (GFC) has sent a strong warning to us as economists. I think that economic research benefits mostly from an open-minded and constructively critical approach.
Going forward, what other projects/research are you looking to or hoping to pursue?
I want to learn more about the way fiscal policy can be conducted in the most beneficial way. At least until the GFC, the discussion in economics has concentrated on a trade-off between discretionary and rule-based fiscal policy. The majority of economists have leaned towards a rule-based fiscal policy to ensure fiscal sustainability. Current fiscal rules rest on the idea of a clear separation between trade-cycle- and structural effects. However, the GFC, COVID-19 crisis, and climate change show that a more nuanced view of fiscal policy is needed. Recent empirical evidence suggests that recessions frequently affect the long-run position of the economy because of asymmetric information, uncertainty, and behavioral biases such as anchoring or framing effects. This calls for a review of fiscal rules. Critical for fiscal rules are exogenous trends, such as aging, climate change, and Baumol’s cost disease. In particular, I am seeking to give evidence about the impact of fiscal rules on the decomposition of public expenditure, which in turn can affect economic growth and equity. Based on long-range panel datasets that recently have become increasingly available, I seek to provide new insights on the causes and effects of public debt. This is part of a broader research agenda of the impact of fiscal policy.
What’s your favorite hobby?
I love to go hiking, in particular, along with my partner. This is one of the best ways to relax and to counter-balance the physical inactivity ‘enforced’ by my office job. Movement in nature and stimulating discussions with my partner give me fresh motivation and new ideas for my research.