June 14, 2009
The Economic Consequences of the Grand Coalition in Germany
by Sebastian Dullien
Last week, the Grand Coalition made sure that their legacy in Germany's economic policy stance will be far beyond the next election on September 27, 2008. After the Bundestag had already voted to amend the constitution and to include a sweeping ban on public borrowing a couple weeks ago, the Bundesrat (the part of parliament which represents the Länder) now also voted for including a more strict ban on public borrowing into the constitution.
Prior to this change, the German constitution had a simple rule: Outside times of "economic disequilibrium", the government was not allowed to borrow more than it was spending on investment.
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