The new German government plans to increase investment spending considerably, yet without increasing taxes or reforming the debt brake enshrined in the constitution. This article explores the government’s (un)conventional approaches to squaring this circle.

Various ways exist to make use of public debt financing despite the existence of the debt brake. These are outlined in the recent coalition agreement, which indicates that the new government will go in this direction. Particularly, the accounting of federal special funds will change and the role...