Germany 2004: Only a transitory economic stimulus from moving tax cuts forward
Wirtschaft im Wandel,
No. 9,
2003
Abstract
In summer 2003 the German economy once again did not overcome the stagnation, which by now lasted three years. Only by the end of this year the German economy will begin to receive stronger support from a then further improved world economy. In the past months both US and European monetary policy have provided sufficient liquidity by lowering interest rates. In the USA, additional support is provided by fiscal policy; tax reductions and rebates increase domestic demand. Overall, Gross Domestic Product in the US will increase by 2.1% this year; in the euro area GDP will merely expand by a modest 0.8%. For Germany one of its key sectors will not be able to lift the economy as usual and GDP, when compared to last year, will only stagnate. Provided by the brought forward tax reform 2000 the coming year will begin with a stimulus to the German economy. The tax reductions, though, will have limited effect on aggregate production, as the increased consumption will not be able to stimulate investment. Accounting for calendar effects GDP in Germany will increase by at least 1% in 2004 compared with this year, but due to several additional working days in 2004, the unadjusted rate of expansion will be 1.7%. No substantial improvements are expected for the job market.
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Unemployment benefit II - Comments on the merging of unemployment benefits and public assistance
Herbert Buscher
Wirtschaft im Wandel,
No. 6,
2003
Abstract
The paper discusses the consequences of the planned reform of the unemployment security system, namely the new unemployment benefits II which consists of the former “Arbeitslosenhilfe“ and of transfers from the social welfare system. The paper calculates the expected reductions in public spending and relates a part of this amout to a possible reduction in labour unit costs and its consequences for employment.
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Investment assistance in Eastern Germany: Risk reforms! - A commentary
Joachim Ragnitz
Wirtschaft im Wandel,
No. 16,
2002
Abstract
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Comparable types of regions in East and West Germany show disparities – East German urban agglomerations have difficulties!
Gerhard Heimpold, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 15,
2002
Abstract
A discussion about the reform of regional policy in Germany and in the EU is ongoing. Against this background the article investigates the regional disparities between similar types of regions in East and West Germany after reunification. The findings do not only show a general East-West gap of economic welfare and of their determinants but also a visible spatial differentiation. It shows that the East German agglomerations have disadvantages in the field of interregional competition. They are worse endowed with crucial growth determinants compared with their West German counterparts, whereas the East-West differences for urbanized regions (where the population density is medium-sized) and rural regions are smaller. The disadvantages stated suggest a stronger concentration of regional policy in favour of these agglomerated spaces targeted on improving the locational attractiveness and strengthening their function as driving forces of the economic catch-up process in East Germany.
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Possible effects of demographic change - An overview
Gunter Steinmann, Olaf Fuchs, Sven Tagge
Wirtschaft im Wandel,
No. 15,
2002
Abstract
One of the more important influences shaping the future economic conditions of the highly industrialized countries is the decline and aging of their population. The article is a comprehensive survey of the impact of this development on key economic variables and the institutions of the welfare state. While the overall consequence of the aging process on productivity growth is more likely to be negative, there are also some offsetting forces like the increase in the capital intensity. The institutions of the welfare state, which are based on intergenerational transfers, will have to be reformed, in order to bring them in line with the demographic process. The prediction of a decrease in the rate of unemployment as a consequence of a declining labor force is according to our analysis not justified.
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Capital for work: The JobFloater starts in November 2002
Herbert Buscher
Wirtschaft im Wandel,
No. 13,
2002
Abstract
A critical review of some of the recommendations made by the Hartz commission, in particular the JobFloater module The author argues that this concept will not contribute to a visible improvement of the labor market situation unless further reforms are launched.
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The flood disaster and GDP in Germany
Udo Ludwig, Hans-Ulrich Brautzsch
Wirtschaft im Wandel,
No. 12,
2002
Abstract
The flood at Elbe, Danube and their tributary streams destroyed billion Euros worth of Capital Stock. GDP, though, does not include Capital Stock, but production. On the basis of plausible assumptions the production interruptions caused by the flood are estimated for Germany and the most severely affected areas of Saxony and Saxony-Anhalt. Considering the “set-aside” funds for restoration and with the help of the Input-Output-Model the direct effects on production and employment within the different economic sectors are being calculated. The results are compared with the foregone consumption due to the delayed next step of the tax reform. On balance clear effects can be observed in construction.
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Labor market reform - The Hartz recommendations are not enough
Herbert Buscher
Wirtschaft im Wandel,
No. 11,
2002
Abstract
Zwei Millionen Arbeitslose weniger in drei Jahren – wer wünscht sich das nicht? Und das Ziel scheint so nahe zu liegen, setzt man nur die Vorschläge der Hartz-Kommission rasch in die Praxis um. Grundsätzlich sind Vorschläge, die zu einer besseren Vermittlung von Arbeitslosen in den ersten Arbeitsmarkt führen, zu begrüßen. Mit ihren Vorschlägen zur Reform der Arbeitsvermittlung hat die Kommission einen ersten, wichtigen Schritt hin zu einer Neuordnung des Arbeitsmarktes unternommen....
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19.08.2002 • 16/2002
Reform des Arbeitsmarktes - Hartz-Vorschläge reichen nicht
Zwei Millionen Arbeitslose weniger in drei Jahren - wer wünscht sich das nicht?
Und das Ziel scheint so nahe zu liegen, setzt man nur die Vorschläge der Hartz-Kommission rasch in die Praxis um. Grundsätzlich sind Vorschläge, die zu einer besseren Vermittlung von Arbeitslosen in den ersten Arbeitsmarkt führen, zu begrüßen. Mit ihren Vorschlägen zur Reform der Arbeitsvermittlung hat die Kommission einen ersten, wichtigen Schritt hin zu einer Neuordnung des Arbeitsmarktes unternommen.
Viele Chancen zur Verbesserung der Arbeitsmarktsituation in Deutschland, wie sie anfänglich in der Kommission diskutiert wurden, wurden jedoch vertan. Exemplarisch sind hier zu nennen, dass die Bezugsdauer für Arbeitslosengeld nicht auf zwölf Monate gekürzt wurde, und dass es nicht gelang, einen praktikablen Vorschlag fur die Zusammenlegung von Arbeitslosenhilfe und Sozialhilfe zu entwickeln. Hier setzten sich wieder partikulare Interessen durch, die Zweifel aufkommen lassen, ob eine Reform des Arbeitsmarktes von diesen Gruppen ernsthaft erwogen wird.
Financial policy dominated by consolidation
Kristina vanDeuverden
Wirtschaft im Wandel,
No. 10,
2002
Abstract
Submitting the Stability and Growth Pact European member states committed themselves to reduce their budget deficits. In spring this year the German fiscal position worsened more and more and it became obvious that the deficit target would – again – be missed. Despite the worsened starting point Germany affirmed to follow its original stability programme and to attain a budget “close to balance” by the year 2004. Thus, consolidation will have to be strengthened and the scope for fiscal policy narrows down.
If current fiscal policy is not sustainable, the necessity of consolidation is obvious. However, the mode of consolidation is controversial. The Stability and Growth Pact focuses on converging budget deficits close to balance. For this, short-term oriented consolidation dominates the more medium and long-term oriented aspects of fiscal policy. Generating economic conditions by fiscal policy is at least restricted, maybe temporarily impossible – and shortening the consolidation period increases its costs.
A forecast of the government’s financial development in the years 2002 to 2006 shows clearly that the restructuring of revenues and expenditure will show no progress. In particular, the lack of structural reforms will burden Germany’s fiscal situation in the medium-term oriented consolidation period. However: the political self-commitment this spring leaves no scope for alternatives, but to enforce the consolidation. Despite some efforts, the projection concludes that by the year 2004 the budget will show a deficit.
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