Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75289
Authors: 
Hein, Eckhard
Truger, Achim
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Institute for International Political Economy Berlin 24/2013
Abstract: 
Currently fiscal policies in Germany seem to be in a very comfortable position and the German Debt Brake is regarded as an institutional precondition for this success and has been exported to the Euro area in the guise of the Fiscal Compact. In this paper we scrutinize German fiscal policies and its new national and European institutional constraints from a macroeconomic perspective. We start by reiterating the requirements for fiscal policies of member countries in a currency union like the Euro area from a Post-Keynesian perspective and examine German fiscal policies in the period from 1999 until 2007 against this theoretical background. We then turn to German fiscal policies during the Great Recession, the German Debt Brake, the Fiscal Compact and future perspectives, and analyse the associated problems and risks. Finally, we discuss alternative scenarios which could avoid the deflationary pressures of the German Debt Brake and the Fiscal Compact on domestic demand and contribute to internally rebalancing the Euro area.
Subjects: 
fiscal policy
government deficits and debt
debt brake
fiscal compact
Germany
Euro area
JEL: 
E61
E62
E64
E65
H62
H63
Document Type: 
Working Paper

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