Kiel Working Papers, Kiel Institute for World Economics
No 1196:
Germany's Fiscal Policy Stance
Horst Siebert
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.
Keywords: Fiscal Policy, Subsidies, German Unification, Debt, Revenue Sharing, Social Policy; (follow links to similar papers)
JEL-Codes: E12,; E13,; H20,I00; (follow links to similar papers)
48 pages, January 2004
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