Germany's Fiscal Policy Stance
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.
|Date of creation:||Jan 2004|
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- Boss, Alfred & Rosenschon, Astrid, 2002. "Subventionen in Deutschland: Quantifizierung und finanzpolitische Bewertung," Kiel Discussion Papers 392/393, Kiel Institute for the World Economy (IfW).
- Olson, Mancur, Jr, 1969. "The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government," American Economic Review, American Economic Association, vol. 59(2), pages 479-87, May.
- Siebert, Horst, 2000. "Zum Paradigma des Standortwettbewerbs," Beiträge zur Ordnungstheorie und Ordnungspolitik, Mohr Siebeck, Tübingen;Walter Eucken Institut, Freiburg, Germany, edition 1, number urn:isbn:9783161473845, May.
- Boss, Alfred & Rosenschon, Astrid, 1996. "Öffentliche Transferleistungen zur Finanzierung der deutschen Einheit: eine Bestandsaufnahme," Kiel Discussion Papers 269, Kiel Institute for the World Economy (IfW).
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