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The fiscal-monetary nexus in Germany

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  • Ehnts, Dirk H.

Abstract

In this paper, the focus lies on the way the German government spends, how it spends and what the connection between finance ministry and central bank is. The institutions involved in the process are identified and discussed. As a member of the Eurozone, Germany's national central bank is not allowed to buy sovereign securities on its own account. The German government uses taxes and revenues from sovereign security issues to finance its spending, continuing the institutional framework that existed during the era of the deutsch mark. This description confirms the idea that 'the state spends first' also in the Eurozone and that it makes sense to consolidate central bank and government(s) even when a government is not issuing a sovereign currency.

Suggested Citation

  • Ehnts, Dirk H., 2020. "The fiscal-monetary nexus in Germany," IPE Working Papers 138/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    • Handle: RePEc:zbw:ipewps:1382020
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    References listed on IDEAS

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    Cited by:

    1. Dirk Ehnst, 2022. "Modern Monetary Theory: The Right Compass for Decision-Making," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(2), pages 128-134, March.
    2. Dirk Ehnts & Michael Paetz, 2021. "COVID-19 and its economic consequences for the Euro Area," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 227-249, June.

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    More about this item

    Keywords

    government spending; fiscal; monetary; Treasury; sovereign default; Eurozone;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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