Arbeitspapier

For a sound fiscal policy: Enabling public investment

Public investment has been badly neglected in Germany over the past two decades, with the result that the public capital stock no longer meets the standards of a modern economy and is inadequate for the challenges that will be posed by demographic change and Germany's international decarbonisation commitments. In total, the areas of education, transport, communication networks and decarbonisation will require at least an additional €450 billion of public investment or public investment subsidies over the next 10 years, equivalent to approximately €45 billion a year. While this amount is manageable in overall economic terms, it is unrealistic to suggest that the required investment can be financed entirely through the reallocation of existing funds within the budget. Consequently, the German Constitution's debt rules should be supplemented by a Golden Rule allowing for borrowing equivalent to the value of the net investment. The leeway offered by mechanisms such as off-budget entities should be utilised until such a rule has been implemented. A sustained reduction in local government debt will also be important in view of the key role played by the municipalities in public investment, especially in transport infrastructure.

Language: Englisch

Bibliographic citation: Series: IW-Policy Paper ; No. 6/2020

Classification: Wirtschaft
National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock
National Budget, Deficit, and Debt: General

Subject: Infrastrukturinvestition
Investitionspolitik
Haushaltskonsolidierung
Reform
Deutschland

Event: Geistige Schöpfung

(who): Bardt, Hubertus
Dullien, Sebastian
Hüther, Michael
Rietzler, Katja

Event: Veröffentlichung

(who): Institut der deutschen Wirtschaft (IW)

(where): Köln

(when): 2020

Handle: http://hdl.handle.net/10419/215538

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Bardt, Hubertus
Dullien, Sebastian
Hüther, Michael
Rietzler, Katja
Institut der deutschen Wirtschaft (IW)

Time of origin

2020

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