Das Public Kapital: How much would higher German public investment help Germany and the euro area?

Selim Elekdag, Dirk Muir and Yiqun Wu

Journal of Policy Modeling, 2022, vol. 44, issue 2, 223-251

Abstract: Given the backdrop of pressing infrastructure needs, this paper argues that higher German public investment would not only stimulate domestic demand in the near term, but would also raise output over the longer-run as well as generate beneficial regional spillovers. Although time-to-build delays can weaken the impact of the stimulus in the short-run, the expansionary effects of higher public investment are substantially strengthened by an accommodative monetary policy stance. The current low-interest rate environment presents a window of opportunity to finance higher public investment at historically favorable rates.

Keywords: Fiscal policy; Monetary policy accommodation; Germany; Euro area; Fiscal multipliers (search for similar items in EconPapers)
JEL-codes: E52 E62 F41 F42 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:44:y:2022:i:2:p:223-251

DOI: 10.1016/j.jpolmod.2020.02.002

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