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The fiscal-monetary nexus in Germany

Dirk Ehnts ()

No 138/2020, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

Abstract: In this paper, the focus lies on the way the German government spends, how it spends and what the connection between finance ministry and central bank is. The institutions involved in the process are identified and discussed. As a member of the Eurozone, Germany's national central bank is not allowed to buy sovereign securities on its own account. The German government uses taxes and revenues from sovereign security issues to finance its spending, continuing the institutional framework that existed during the era of the deutsch mark. This description confirms the idea that 'the state spends first' also in the Eurozone and that it makes sense to consolidate central bank and government(s) even when a government is not issuing a sovereign currency.

Keywords: government spending; fiscal; monetary; Treasury; sovereign default; Eurozone (search for similar items in EconPapers)
JEL-codes: B52 E42 E63 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ipewps:1382020

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