Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215538 
Year of Publication: 
2020
Series/Report no.: 
IW-Policy Paper No. 6/2020
Publisher: 
Institut der deutschen Wirtschaft (IW), Köln
Abstract: 
Public investment has been badly neglected in Germany over the past two decades, with the result that the public capital stock no longer meets the standards of a modern economy and is inadequate for the challenges that will be posed by demographic change and Germany's international decarbonisation commitments. In total, the areas of education, transport, communication networks and decarbonisation will require at least an additional €450 billion of public investment or public investment subsidies over the next 10 years, equivalent to approximately €45 billion a year. While this amount is manageable in overall economic terms, it is unrealistic to suggest that the required investment can be financed entirely through the reallocation of existing funds within the budget. Consequently, the German Constitution's debt rules should be supplemented by a Golden Rule allowing for borrowing equivalent to the value of the net investment. The leeway offered by mechanisms such as off-budget entities should be utilised until such a rule has been implemented. A sustained reduction in local government debt will also be important in view of the key role played by the municipalities in public investment, especially in transport infrastructure.
JEL: 
H54
H60
Document Type: 
Working Paper

Files in This Item:
File
Size
496.26 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.