Cover of book: Dynamic Interactions Between Public Finances and Economic Activity in Germany
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Dynamic Interactions Between Public Finances and Economic Activity in Germany

Time Series Perspectives on the Sustainability, Cyclicality, Sensitivity and Economic Impact of Fiscal Policy
Authors:
Publisher:
 2014

Summary

How do German public finances respond to economic developments? And what is the impact of large economic shocks on fiscal sustainability? Vice versa, what is the effect of sustainability restrictions on fiscal stimulus measures? In the context of the ongoing sovereign debt crisis, these questions constitute the core of public finance debates. Based on advanced macro-econometric methods, this study offers new insights to this field. The author shows how expenditure dynamics have been decisive for ruining the sustainability of public finances in Germany and how a debt brake could bring them back on a sustainable path. He demonstrates how static estimation methods fail to detect dynamic relationships between tax bases and tax revenues – especially with respect to profit taxes. Finally, he shows that economic stimuli programmes in Germany have become gradually more pro-cyclical over the last four decades and sustainability restrictions have strong effects on the size of fiscal multipliers.

Bibliographic data

Edition
1/2014
Copyright Year
2014
ISBN-Print
978-3-8487-1092-8
ISBN-Online
978-3-8452-5198-1
Publisher
Nomos, Baden-Baden
Series
Neue Studien zur Politischen Ökonomie
Volume
14
Language
English
Pages
158
Product Type
Monograph

Table of contents

ChapterPages
  1. Titelei/Inhaltsverzeichnis No access 1 - 16
  2. Introduction No access 17 - 21
    1. Does Wagner's Law Ruin the Sustainability of German Public Finances? No access 22 - 56
    2. The Timing and Responsiveness of Fiscal Policy in Germany No access 57 - 92
    3. Estimating Dynamic Tax Elasticities for German Data No access 93 - 122
    4. Fiscal Policy under Sustainability Constraints No access 123 - 152
  4. Summary and Conclusions No access 153 - 158

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