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May 2022 marked the 90th anniversary of the end of Heinrich Brüning’s term as Reich Chancellor. To this day, the economic effects of Brüning’s extreme austerity measures remain unclear. However, new data and calculations have made an initial quantification of the economic consequences of Brüning’s policies possible. An analysis based on a time series model illustrates how the Weimar Republic’s economy could have developed without Brüning’s austerity measures. According to this model, real GDP fell by around 4.5 percent overall in the reference year 1932 and unemployment rose sharply as a result of Brüning’s emergency decrees. Considering this analysis, current calls for fiscal austerity to reduce debt should be questioned., DIW Weekly Report

Im Mai 2022 hat sich das Ende von Reichskanzler Heinrich Brünings Amtszeit zum 90. Mal gejährt. Bis heute sind die ökonomischen Auswirkungen von Brünings extremer Austeritätspolitik noch immer ungeklärt. Neue Daten und Berechnungen erlauben erstmals die Quantifizierung der ökonomischen Folgen der von Brüning erlassenen Spardekrete. Eine Analyse auf Basis eines Zeitreihenmodells veranschaulicht, wie sich die Wirtschaft der Weimarer Republik ohne Brünings Sparmaßnahmen hätte entwickeln können. Die reale Wirtschaftsleistung sank demzufolge durch die Notverordnungen im Referenzjahr 1932 insgesamt um rund 4,5 Prozent und die Arbeitslosigkeit stieg stark. Vor diesem Hintergrund sollten Forderungen nach einer Schuldenreduzierung durch Austeritätspolitik heute hinterfragt werden., DIW Wochenbericht

Although economic growth continued to be lukewarm in 2021, tax revenue increased significantly, even exceeding the pre-crisis level despite economic policy measures associated with revenue losses. During the 2008-2011 global financial crisis, tax revenue followed a different path: Its recovery lagged behind economic recovery, first reaching the pre-crisis level in 2011. In 2021, value-added tax (VAT) increased as expected following the temporary reduction of the VAT rates in 2020, as did the pay-as-you-earn tax due to the reduction of short-time work. In contrast, taxes on profits have experienced unexpectedly high growth. Clearly, economic policy has stabilized incomes more successfully via rapid and comprehensive measures during the coronavirus pandemic than it did during the global financial crisis. However, price developments are likely to be driving the strong increase in—nominal— profit income. This is one reason that the plans to provide households with relief to help them cope with skyrocketing energy prices and to increase the personal allowance are the right decisions., DIW Weekly Report

91 countries around the world have established fiscal rules to limit national debt and/or budget deficits. Using data from previous natural disasters, this report investigates how these fiscal rules affect overall economic development following a crisis. The results show countries with fiscal rules fare better after such shocks than those without. GDP, private consumption, and investments develop markedly and sustainedly better: They are two to four percent higher and growth lasts for two to four years. The key factor here is likely fiscal policy, which can be expansionary, particularly if the fiscal rules pro-vide for exceptions. This is in adherence with the idea that the rules create fiscal space in good times that can later be used in bad times. For example, during the coronavirus pandemic, the German debt break has proven its worth. However, to be prepared for future crises, it must be re-implemented in a timely manner., DIW Weekly Report

As the coronavirus pandemic spread across the globe in early 2020, the European Central Bank as well as national governments in the euro area enacted or announced numerous economic policy measures to counteract the severe economic consequences of the resulting lockdowns. In this paper, the immediate effect of the announcements on government bond and stock markets are estimated in a panel study. The results show that the ECB’s monetary policy measures barely had a stabilizing effect on the financial markets in the short term. With the exception of the announcement of Germany’s Economic Stabilization Fund, the fiscal rescue packages of other national governments and the EU did not lower government bond yields. In contrast, suspending fiscal rules and relaxing banking regulations had a calming effect on the markets, especially the government bond markets. In conjunction with fiscal policy measures, EU-wide measures in particular, they were able to stabilize the stock markets. Overall, the results show that policy action on the part of individual governments is not sufficiently effective on its own. To be effective, measures must be taken by Member States together. A joint crisis mechanism, such as the European Recovery Plan announced by the EU, could be quite efficient., DIW Weekly Report

Weltweit haben sich 91 Länder Fiskalregeln auferlegt, um die Staatsverschuldung und/oder das Haushaltsdefizit zu begrenzen. Wie sich diese Fiskalregeln auf die gesamtwirtschaftliche Entwicklung nach Krisen auswirken, untersucht dieser Bericht anhand von vergangenen Naturkatastrophen. Demnach schneiden Länder mit Fiskalregeln besser nach solchen Schocks ab als Länder ohne Regeln. Bruttoinlandsprodukt, privater Verbrauch und Investitionen entwickeln sich deutlich und anhaltend besser: Sie liegen zwei bis vier Prozentpunkte höher und zwar über zwei bis vier Jahre. Schlüsselfaktor dafür ist wohl die Finanzpolitik, die vor allem dann expansiv sein kann, wenn die Fiskalregeln Ausnahmen vorsehen. Dies steht im Einklang mit der Idee, dass die Regeln in guten Zeiten den finanzpolitischen Spielraum schaffen, der in schlechten Zeiten verwendet werden kann. In der aktuellen Corona-Pandemie hat sich demnach beispielsweise die deutsche Schuldenbremse der letzten Jahre bewährt. Allerdings muss ihre Aussetzung zeitnah wieder zurückgefahren werden, um für künftige Krisen gewappnet zu sein., DIW Wochenbericht

espanolUna politica fiscal adecuada permite que el gasto, la inversion y las finanzas publicas de los gobiernos a cualquier nivel territorial, sean eficientes y consecuentemente permite que los niveles de crecimiento economico se incrementen. A nivel departamental, Boyaca desconoce la influencia que tiene la recaudacion de impuestos municipales en la distribucion espacial y dimensional de la actividad economica. Este desconocimiento limita al departamento, constituir una mejor politica de desarrollo regional; por ello el objetivo de este trabajo, es establecer medidas que valoren las relaciones del recaudo de impuesto predial per capita en la actividad economica y los ingresos corrientes per capita en la eficiencia fiscal de la region. La informacion para el desarrollo de este trabajo es tomada del Geo Portal del DANE y del Servicio Estadistico Nacional (SEN), siendo todos los datos del ano 2016. La metodologia empleada se baso en la deteccion de autocorrelacion espacial con la utilizacion del estadistico I de Moran y c de Geary, se incluyeron modelos de econometria espacial, de donde se establecieron las relaciones funcionales de acuerdo al objetivo de este trabajo. Como conclusiones principales, se obtiene que el impuesto predial per capita se relaciona negativamente con los niveles de crecimiento economico y se resalta la importancia del incremento de ingresos corrientes para mejorar la eficiencia fiscal. EnglishAn adequate fiscal policy allows government spending, investment and public finances at any territorial level to be efficient and consequently allows economic growth levels to increase. At the departmental level, Boyaca is unaware of the influence that municipal tax collection has on the spatial and dimensional distribution of economic activity. This lack of knowledge limits the department to constitute a better regional development policy; therefore, the main objective of this work is to establish measures that assess the relations of the collection of property tax per capita in economic activity and current income per capita in the fiscal efficiency of the region. The information for the development of this work is taken from the DANE Geo Portal and the National Statistical Service (SEN), with all the data from 2016. The methodology used was based on the detection of spatial autocorrelation with the use of the statistician Moran's I and Geary’s c, spatial econometrics models were included, from which the functional relationships were established according to the objective of this work. As main conclusions, it is obtained that the property tax per capita is negatively related with the levels of economic growth and the importance of the increase in current income to improve fiscal efficiency is highlighted.

Ten years after the 2008 financial crisis, in the euro area investment is still below the pre-crisis level. Public and private investment growth is so weak that capital per worker (capital intensity) has virtually remained constant. An increase in public investment activity could ultimately stimulate private investment. Estimates for the euro area show that an increase in public investment by one billion euro goes hand in hand with a medium-term increase in private investment of around 1.1 billion euro. In Germany, the effect is somewhat greater. Investment in construction and infrastructure are the most significant drivers. The public sector’s widespread reluctance to invest could partially explain the weakness in private investment activity. The public sector should now begin investing more. And the rigid balanced budget amendment (Schuldenbremse) should be replaced by more flexible expenditure rules., DIW Weekly Report

Die Investitionen im Euroraum sind auch zehn Jahre nach der Finanzkrise noch immer nicht auf dem Vorkrisenniveau. Öffentliche und private Investitionen entwickeln sich so schwach, dass der Kapitaleinsatz pro Erwerbstätigem nahezu konstant bleibt. Ein Anstieg der öffentlichen Investitionstätigkeit könnte auch die private anregen. Schätzergebnisse für den Euroraum zeigen, dass ein Anstieg öffentlicher Investitionen um eine Milliarde Euro mit einem mittelfristigen Anstieg der privaten Investitionen von etwa 1,1 Milliarden Euro einhergeht. In Deutschland ist der Effekt sogar etwas größer: Eine investierte öffentliche Milliarde Euro erhöht die privaten Investitionen im Zeitraum von fünf Jahren um knapp zwei Milliarden Euro. Der Effekt wird insbesondere durch Bau- und Infrastrukturinvestitionen getrieben. Die weitreichende Investitionszurückhaltung der öffentlichen Hand könnte somit auch einen Teil der Schwäche der privaten Investitionstätigkeit erklären. Öffentliche Investitionen müssen jetzt verstärkt getätigt werden. Dazu sollte die starre Schuldenbremse von flexibleren Ausgabenregeln abgelöst werden., DIW Wochenbericht

DIW Wochenbericht

DIW Weekly Report