IDEAS home Printed from https://ideas.repec.org/a/spr/empeco/v15y1990i1p17-54.html
   My bibliography  Save this article

Fiscal Policy in the Federal Republic of Germany

Author

Listed:
  • Franz, Wolfgang

Abstract

The main purpose of this paper is at least twofold. Firstly, the paper gives a record of fiscal policy in the Federal Republic of Germany by describing various phases of its design during the past twenty years. This is done on the background of changing economic conditions and different monetary regimes. As a second purpose, the paper attempts to evaluate the performance of fiscal policy in the Federal Republic of Germany both by taking stock of some empirical results obtained in other studies and by own econometric investigations. The goal of the econometric analysis is to estimate fiscal and monetary policy rules by taking into account explicitly the possibility that these policies have to be treated as at least partly endogenous variables. As a major outcome of the first purpose, three phases of fiscal policy may be distinguished. While the first phase is characterized by a short-term oriented global demand management prevailing until the mid-seventies, fiscal policy was more in favor of a steadily oriented growth and structural policy afterwards. This phase was succeeded by an embarkment upon a cause of fiscal consolidation since the beginnings of the eighties. With respect to the effectiveness of fiscal policy actions, our own econometric analysis is based on a four equations model. Basically it consists of a conventional IS-LM model with a very simple Phillips curve. In addition, fiscal and monetary reaction functions are estimated in order to avoid biased coefficients associated with the impact of fiscal and monetary impulses on employment. It is shown, how important it is (econometrically) to treat policies as endogenous variables. Moreover, our results point to the well-known experience that only a combination of expansive fiscal and monetary measures is suitable to fight against unemployment.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Franz, Wolfgang, 1990. "Fiscal Policy in the Federal Republic of Germany," Empirical Economics, Springer, vol. 15(1), pages 17-54.
    • Handle: RePEc:spr:empeco:v:15:y:1990:i:1:p:17-54
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Blanchard, Olivier Jean, 1990. "Why does money affect output? A survey," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 15, pages 779-835, Elsevier.
    2. Aschauer, David Alan, 1985. "Fiscal Policy and Aggregate Demand," American Economic Review, American Economic Association, vol. 75(1), pages 117-127, March.
    3. Stanley Fischer, 1987. "Monetary Policy and Performance in the U.S., Japan and Europe, 1973-86," NBER Working Papers 2475, National Bureau of Economic Research, Inc.
    4. Evans, Paul, 1985. "Do Large Deficits Produce High Interest Rates?," American Economic Review, American Economic Association, vol. 75(1), pages 68-87, March.
    5. Michael J. Boskin, 1987. "Concepts and Measures of Federal Deficits and Debt and Their Impact on Economic Activity," NBER Working Papers 2332, National Bureau of Economic Research, Inc.
    6. Stanley Fischer, 1987. "Monetary Policy and Performance in the U. S. , Japan and Europe, 1973-86," Working papers 462, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Boskin, Michael J., 1987. "Concepts and Measures of Federal Deficits and Debt and their Impact on Economic Activity," CEPR Publications 244437, Stanford University, Center for Economic Policy Research.
    8. Barro, Robert J, 1986. "Recent Developments in the Theory of Rules versus Discretion," Economic Journal, Royal Economic Society, vol. 96(380a), pages 23-37, Supplemen.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Franz, Wolfgang, 1991. "International migratory movements: The German experience," Discussion Papers, Series II 160, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Franz, Wolfgang & Oser, Ursula & Winker, Peter, 1993. "Migratory movements in a disequilibrium macroeconometric model for West Germany," Discussion Papers, Series II 202, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Einar Bowitz & Stein Inge Hove, 1996. "Business cycles and fiscal policy: Norway 1973-93," Discussion Papers 178, Statistics Norway, Research Department.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Alan Aschauer, 1990. "Is Government Spending Stimulative?," Contemporary Economic Policy, Western Economic Association International, vol. 8(4), pages 30-46, October.
    2. Sharon J. Erenburg, "undated". "Linking Public Capital to Economic Performance, Public Capital: The Missing Link Between Investment and Economic Growth ," Economics Public Policy Brief Archive 14, Levy Economics Institute.
    3. Sharon J. Erenburg, 1993. "The Relationship Between Public and Private Investment," Economics Working Paper Archive wp_85, Levy Economics Institute.
    4. Elmendorf, Douglas W. & Gregory Mankiw, N., 1999. "Government debt," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 25, pages 1615-1669, Elsevier.
    5. Carlos Vieira, 2004. "The Deficit?Interest Rate Connection: an empirical assessment of the EU," Economics Working Papers 5_2004, University of Évora, Department of Economics (Portugal).
    6. Amir Kia, 2006. "Deficits, Debt Financing, Monetary Policy and Inflation in Developing Countries: Internal or External Factors? Evidence from Iran," Carleton Economic Papers 06-03, Carleton University, Department of Economics, revised Nov 2006.
    7. David Alan Aschauer, 1990. "Finite Horizons, Intertemporal Substitution, and Fiscal Policy," Public Finance Review, , vol. 18(1), pages 77-91, January.
    8. Sahar Bahmani, 2007. "Do budget deficits follow a linear or non-linear path?," Economics Bulletin, AccessEcon, vol. 5(14), pages 1-9.
    9. Bharat Kolluri & Michael Panik & Mahmoud Wahab, 2000. "Government expenditure and economic growth: evidence from G7 countries," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 1059-1068.
    10. Spector, Lee C, 1999. "Macroeconomic Models and the Determination of Crowding Out," Public Finance = Finances publiques, , vol. 54(1-2), pages 84-98.
    11. Ganelli, Giovanni, 2003. "Useful government spending, direct crowding-out and fiscal policy interdependence," Journal of International Money and Finance, Elsevier, vol. 22(1), pages 87-103, February.
    12. Boskin, Michael J., 1988. "Issues in the Measurement and Interpretation of Saving and Wealth," CEPR Publications 244418, Stanford University, Center for Economic Policy Research.
    13. Mark Wheeler, 1999. "The macroeconomic impacts of government debt: An empirical analysis of the 1980s and 1990s," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(3), pages 273-284, September.
    14. David Alan Aschauer, 1988. "Tax Rates, Deficits, and Intertemporal Efficiency," Public Finance Review, , vol. 16(3), pages 374-384, July.
    15. Amir Kia, 2004. "Deficits, Debt Financing, Monetary Policy and Inflation in Developing Countries: Internal or External Factors?," Carleton Economic Papers 04-15, Carleton University, Department of Economics.
    16. Kia, Amir, 2006. "Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?: Evidence from Iran," Journal of Asian Economics, Elsevier, vol. 17(5), pages 879-903, November.
    17. Nils Olekalns, 1989. "Substitution Between Private and Public Consumption in Australia," The Economic Record, The Economic Society of Australia, vol. 65(1), pages 16-26, March.
    18. repec:ebl:ecbull:v:5:y:2007:i:14:p:1-9 is not listed on IDEAS
    19. Waqas, Muhamad & Awan, Masood Sarwar & Aslam, Muhammad Amir, 2011. "We are living on the cost of our children," MPRA Paper 32044, University Library of Munich, Germany.
    20. B. Douglas Bernheim, 1987. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316, National Bureau of Economic Research, Inc.
    21. Dean Croushore, 1990. "How big is your share of government debt?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-12.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:empeco:v:15:y:1990:i:1:p:17-54. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.