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Debt Brake as a Bone of Contention: A Proven Instrument Even in Times of Crisis?

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Listed:
  • Ludger Schuknecht
  • Christoph A. Schaltegger
  • Michele Salvi
  • Jan Schnellenbach
  • Thomas Lenk
  • Christian Bender
  • Mario Hesse
  • Gert G. Wagner
  • Stefan Korioth
  • Klaus Gründler
  • Philipp Heil
  • Niklas Potrafke
  • Dirk Niepelt

Abstract

The fight against the Covid 19 pandemic poses considerable challenges for the budgets of Germany’s federal, state, and local governments. In view of the tasks to be tackled, the federal government and almost all the states invoked the debt brake exemption for 2020 and significantly expanded their borrowing. The debt brake will also be suspended once again in 2021. Are the debt brake rules wrongly designed for today? Do we need more flexible criteria for government debt, or should the debt brake once again become the guiding principle for German fiscal policy after the pandemic?

Suggested Citation

  • Ludger Schuknecht & Christoph A. Schaltegger & Michele Salvi & Jan Schnellenbach & Thomas Lenk & Christian Bender & Mario Hesse & Gert G. Wagner & Stefan Korioth & Klaus Gründler & Philipp Heil & Nikl, 2021. "Debt Brake as a Bone of Contention: A Proven Instrument Even in Times of Crisis?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(04), pages 03-30, April.
    • Handle: RePEc:ces:ifosdt:v:74:y:2021:i:04:p:03-30
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