German fiscal policy is nowadays often presented as a shining example due to successful budget consolidation after the Great Recession. However, the idea that the German success is the result of a well-thought-out economic strategy that could therefore serve as a role model for other countries...

Fiscal policy in the Euro area is still dominated by austerity measures implemented under the institutional setting of the 'reformed' stability and growth pact, and the even stricter 'fiscal compact'. At the same time, calls for a more expansionary fiscal policy to overcome the economic crisis...

The German debt brake is often regarded as a great success story, and has therefore served as a role model for the Euro area and its fiscal compact. In this paper we fundamentally criticize the debt brake. We show that (1) it suffers from serious shortcomings, and its success is far from certain...