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...

The 2003 Article IV Consultation discussions took place against a backdrop of serious concerns about the health and prospects for the economy. The authorities saw the revised policy strategy as providing an important boost to confidence and the right balance of supply-side initiatives and...

The study on selected issues first focuses on business fixed investment, then analyzes the profitability of Germany’s banking sector and looks at restructuring options, and finally, examines the international dimensions of Germany’s financial sector. The paper reviews the various ways in...

This 2002 Article IV Consultation highlights that the real GDP of the Netherlands is projected to rise by 1 percent in 2002, implying a return of growth to about 3 percent at an annual rate in the second half, and to rise by 3 percent in 2003. The pickup reflects an improvement in the worldwide...