EXECUTIVE SUMMARY Political context. The political environment has been broadly stable, albeit the ongoing dispute with gold company Centerra is creating tensions. In September, the government and Centerra signed a memorandum of understanding which stipulated the exchange of 33 percent of the...

This Selected Issues paper examines several real sector issues, including estimates of potential output, the effect of Intel's withdrawal on gross domestic product (GDP), labor market and inequality and electricity prices in Costa Rica. The production function approach shows that the main...

This cross-country paper explains differences in external sector performance among four large euro area countries—France, Germany, Italy, and Spain. The paper discusses that during 2001–04, the performance of the external sector differed markedly among these four largest euro area countries....

Fiscal policy has a strong foundation in the multiyear program of spending cuts, tax reforms, and deficit reduction in Germany. Germany's focus on actual, rather than cyclically adjusted, fiscal goals and outcomes carries the risk of rendering fiscal policy procyclical. The recent business and...

The conceptual framework of this paper assumes that macroeconomic performance depends on the interplay between the economic environment and policies. Declining labor shares, wage moderation, and employment performance in Germany and the Netherlands have been presented. A number of policy changes...

The three-point VAT increase is part of a package in which unemployment payroll taxes will be reduced. Risks to the recovery are balanced but the range of forecasts for 2007 is unusually wide. The priority for Germany is to transmit its external strength to the domestic economy, thus further...

For more than a decade, growth in Germany has been subdued and uneven. This paper introduces the stylized facts pertaining to the strength in exports, the weakness in domestic demand, and the surge in the current account. It discusses the adjustment undertaken in the private sector and its...

This Selected Issues paper attempts to analyze the end-point problem and improve the quality of potential GDP estimates for Germany. It projects that Germany’s potential GDP growth will slow over the coming decade, mainly because of declining labor input. The paper focuses on a long-term...

The staff report for the 2004 Article IV Consultation on Germany highlights economic developments and policies. Profitability in nonfinancial firms has picked up, and corporate balance sheets are being repaired. On the policy front, Germany has made important headway over the past year in...

This Selected Issues paper on Germany reviews investment trends and business capital stock in Organization for Economic Co-operation and Development (OECD) countries. Sharp wage increases are found to boost capital formation in the short term as employers substitute capital for labor at a rate...