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Germany's fiscal policy stance

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  • Siebert, Horst

Abstract

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.

Suggested Citation

  • Siebert, Horst, 2004. "Germany's fiscal policy stance," Kiel Working Papers 1196, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1196
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    File URL: https://www.econstor.eu/bitstream/10419/3151/1/kap1196.pdf
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    References listed on IDEAS

    as
    1. 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, December.
    2. Boss, Alfred & Rosenschon, Astrid, 2002. "Subventionen in Deutschland: Quantifizierung und finanzpolitische Bewertung," Kiel Discussion Papers 392/393, Kiel Institute for the World Economy (IfW Kiel).
    3. 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 479-487, May.
    4. 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 Kiel).
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    More about this item

    Keywords

    Fiscal Policy; Subsidies; German Unification; Debt; Revenue Sharing; Social Policy;
    All these keywords.

    JEL classification:

    • I00 - Health, Education, and Welfare - - General - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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