Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/3151 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
Kiel Working Paper No. 1196
Publisher: 
Kiel Institute for World Economics (IfW), Kiel
Abstract: 
This paper analyzes Germany's fiscal policy position. Half of GDP passes through the hands of government, a high debt to GDP ratio limits the maneuvering, and the revenue sharing mechanism prevents a competitive federalism. Most importantly for the future, the federal finance minister has to pick up the deficits that the social security systems leave behind. Transfers from the public budget to the social security systems are large, and since 1998 the elasticity of transfers to nominal GDP is 4. This trend will intensify in an aging society. All these factors weaken the prospects for reform that Germany must undertake in its taxation and expenditure system in view of the changed international conditions.
Subjects: 
Fiscal Policy
Subsidies
German Unification
Debt
Revenue Sharing
Social Policy
JEL: 
I00
H20
E13
E12
Document Type: 
Working Paper

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