The “financial crisis” and its sequel, the current sovereign debt crisis, appear to be the latest permutations of an old conflict between capitalism and democracy that forcefully reasserted itself after the end of the postwar growth period. Today's calamities were preceded by high inflation...

Over the past four decades, the accumulation of policy legacies and public debt has led to a decline in fiscal flexibility in Germany and the United States. By applying an index of fiscal democracy to Germany, the paper illustrates the associated shrinkage of democratic control over budget...