German Labor Market and Fiscal Reforms 1999 to 2008: Can They be Blamed for Intra-Euro Area Imbalances?

Niklas Gadatsch, Nikolai Stähler and Benjamin Weigert

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: In this paper, we assess the impact of major German structural reforms from 1999 to 2008 on key macroeconomic variables within a two-country monetary union DSGE model. By many, these reforms, especially the Hartz reforms on the labor market, are considered to be the root of thereafter observed imbalances in the Euro Area. We find that, in terms of German GDP, consumption, investment and (un)employment, the reforms were a clear success albeit the impact on the German current account was only minor. Most importantly, the rest of the Euro Area benefited from positive spillover effects. Hence, our analysis suggests that the reforms cannot be held responsible for the currently observed macroeconomic imbalances within the Euro Area.

JEL-codes: E32 E62 H20 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-eec, nep-mac and nep-pbe
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: German labor market and fiscal reforms 1999–2008: Can they be blamed for intra-euro area imbalances? (2016)
Working Paper: German labor market and fiscal reforms 1999 to 2008: Can they be blamed for intra-euro area imbalances? (2015)
Working Paper: German labor market and fiscal reforms 1999 to 2008: Can they be blamed for intra-Euro Area imbalances? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112960

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