Klaus Gründler

The Growth Crisis of Germany: A Blueprint of the Developed Economies

Abstract Germany has realized tremendous growth rates in the aftermath of the Second World War. Since the early 1970s, growth rates declined and settled down at a more or less constant rate of 2% per year, only to experience a renewed negative trend around the early 2000s. Estimating GMM growth models in a panel of 187 countries between 1970 and 2010, we illustrate that large parts of historical welfare increases have emerged due to conditional convergence, human capital accumulation, and innovation activity. Whereas conditional convergence was the main driver behind the extraordinary postwar growth rates in Germany, human capital accumulation in Germany currently lags behind the average level of most developed countries. While this may explain the moderate position of Germany in the group of the 25 richest countries, the developed countries on their part are experiencing a period of below-average GDP growth. In nearly all advanced economies, growth reveals a downward trend since the turn of the millennium. We argue that this decline must be traced back to a general lack of radically new ideas in the world economy. The explanation of the German growth crisis may thus be considered a blueprint of the situation in developed economies.

Do expectations matter? Reassessing the effect of government spending on key macroeconomic variables in Germany

ABSTRACT This article contributes to the debate on how to properly identify exogenous fiscal shocks in the data. We include expectations held by consumers and firms into the standard vector autoregression (VAR) framework based on information from historical issues of the German political magazine Der Spiegel. The findings underscore the need to account for expectations, as failing to do so leads to significant misinterpretation of the effects of government spending. When neglecting anticipation effects, our results support the recent findings for Germany by pointing to a rather positive effect of government spending on GDP. However, inclusion of expectations yields a change in this effect, suggesting that government spending is much less beneficial for GDP, as it crowds out private consumption and investment.

Wie entsteht Stagflation

Der Beitrag diskutiert die Ursachen von Stagflation. Hierfur werden zunachst drei Kennzahlen abgeleitet, welche das Auftreten und die Starke der Stagflation in der Weltwirtschaft und auf Landerebene abbilden. Im Anschluss wird anhand einer Reihe empirischer Schatzungen uberpruft, welche Grosen die Stagflationsmase beeinflussen. Es stellt sich heraus, dass der Olpreis eine ambivalente Wirkung entfaltet und dass seine Bedeutung im Zeitverlauf abnimmt. Wahrend die Arbeitsproduktivitat die Wahrscheinlichkeit und die Starke der Stagflation uber die Zeit hinweg relativ robust reduziert, hat sich die Geldpolitik seit Beginn der 1990er Jahre mehr und mehr als Hauptquelle stagflationarer Perioden herauskristallisiert. Damit stellt Stagflation heute kein unuberwindbares Problem mehr fur die Wirtschaftspolitik dar. Dies bestatigt auch die rucklaufige Persistenz im Auftreten von Stagflation. Insgesamt ist die Wahrscheinlichkeit, dass Stagflation entsteht, in den letzten Jahrzehnten zuruckgegangen.