"Understanding German fiscal policy" de Tyler Cowen (Marginal Revolution)
The Germans see themselves as having made the necessary wage adjustments, in advance, and in a manner that Keynesian economics is skeptical of. The Germans also see themselves as having produced and maintained true credibility about future fiscal policy (how many other countries can claim that?) by a constitutional amendment, a lot of tough talk, and a relatively robust real economy. German bonds are a safe haven investment, even though Germany’s numbers, such as the debt-gdp ratio, are not overwhelmingly wonderful. That’s a testament to German public sector management.
Did I mention that — after unification — the Germans tried (against their will, they had to) more than a decade of massive fiscal stimulus, and subsidization of consumption, starting with well under full employment, and yet with mediocre results? That wasn’t long ago.
And yet somehow it is a mystery, or a strange annal in some long book of Dogmengeschichte, that the Germans are not more interested in Keynesian economics.
It is incorrect to argue that: "their high-savings export-oriented economy only works if someone else runs a high-debt economy and buys their stuff." The Germans do just fine when they trade with current account surplus countries. If Portugal and Greece were more like Norway or the Netherlands, the German trade surplus might well go down, but the total value of German exports likely would go up (Germany exports mainly "normal goods") and the German economy would do just fine.
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