Germany's post-2000 stagnation in the European context - a lesson in macroeconomic mismanagement

Eckhard Hein and Achim Truger

No 03-2006, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: In the present paper we question the mainstream diagnosis of Germany’s post-2000 stagnation as well as the prescribed remedies. We show that the ‘institutional sclerosis’ view of Germany’s stagnation is unfounded and that therefore the political measures proposed and actually taken are misguided. Instead, we claim that macroeconomic mismanagement explains the German absolute and relative stagnation compared with the Euro area as a whole and with the USA. If the problem of macroeconomic mismanagement is not addressed and solved, irrespective of occasional cyclical upswings, we predict a continuing stagnation tendency for the German economy. And we argue that this is not only a German problem, but a matter of European concern, because the macroeconomic policies which have caused the German constellation will have major negative feedback effects on the other Euro area countries in the near future.

Keywords: Macroeconomic policy; structural reforms; unemployment; growth; inflation (search for similar items in EconPapers)
JEL-codes: E58 E61 E62 E63 E64 E65 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2006-03
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Chapter: Germany’s Post-2000 Stagnation in the European Context — a Lesson in Macroeconomic Mismanagement (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:03-2006

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