Location of Repository

Investitionen der öffentlichen Hand in die Zukunft: Ja! Die Konjunktur aber retten sie nicht mehr!

By Hans-Ulrich Brautzsch, Brigitte Loose and Udo Ludwig

Abstract

In order to mitigate the effects of the deep economic recession, the German federal government has adopted two economic stimulus packages to be applied in the period from 2009 to 2010. According to our estimations, these programs include investments amounting to 25.3 billion Euros mainly in infrastructure and education. We investigate the total effects of these investments on production and employment using a static input-output model. We find that the gross domestic product will increase by at most one percentage point, namely 0.4 points in 2009 and 0.7 points in 2010. This implies that approximately 400 000 jobs will be safeguarded. About one quarter of the effects will concern construction and business services respectively. For several reasons, our calculations constitute the upper bound to the expected effects. The increasing demand in construction could lead to significantly increasing prices. In light of the expected decline in production, the economic effects of the programs may appear to be low. Obviously, the strong decrease in external demand and its impact on the economy cannot be effectively combated by instruments of national economic policies.

OAI identifier:

Suggested articles

Preview


To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.