Germany: Selected Issues

International Monetary Fund

No 2004/340, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper on Germany reviews investment trends and business capital stock in Organization for Economic Co-operation and Development (OECD) countries. Sharp wage increases are found to boost capital formation in the short term as employers substitute capital for labor at a rate that adjusts to the higher relative price for labor. To limit the political economy biases to fiscal policy, the paper explores options to strengthen budgetary institutions, notably more transparency; stronger budgetary rules; and more room for Länder governments to mobilize revenue and tailor spending to local circumstances.

Keywords: ISCR; CR; growth rate; government; payroll burden; social security contribution rate; inflation differential; capital accumulation; equilibrium exchange rate; payroll cost; Unemployment; Labor force participation; Wages; Employment; Europe (search for similar items in EconPapers)
Pages: 104
Date: 2004-11-02
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Citations: View citations in EconPapers (3)

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