The study commissioned by Forum New Economy examines the fiscal policy framework that has shaped Germany’s economic policy over the past decades and how it should be redesigned to handle the enormous challenge confronting the German economy in the face of the COVID-19 crisis.
Jens Südekum (Düsseldorf Institute for Competition Economics) and Michael Hüther (Institut der deutschen Wirtschaft) show how the old paradigm that centered on deficit control and reduced state involvement in the economy caused underinvestment in infrastructure and the worsening of the financial situation in many local municipalities. The authors sketch out a new fiscal policy framework in the context of the current crisis.
The full study, which is now available as a Forum New Economy Working Paper – below, was first presented at the VII New Paradigm Workshop. Watch the presentation of the study with comments by Eric Lonergan, Christian Kastrop, Daniela Gabor and Guntram Wolff below.