A Different View of Germany's Stagnation

Eckhard Hein and Achim Truger

Challenge, 2005, vol. 48, issue 6, pages 64-94

Abstract: The authors fundamentally question the claims that institutional sclerosis explains the present economic stagnation in Germany. Instead, they argue that the combined effects of restrictive monetary policies, restrictive and sometimes pro-cyclical fiscal policies, and overly moderate wage policies in Germany since the mid-1990s explain the stagnation. Finally, they recommend more expansive fiscal and monetary policies in the short run, and conditions that allow for real wage growth in Germany based on long-run national productivity growth.

Date: 2005
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