Germany's debt brake, or 'Schuldenbremse,' is a fiscal rule that forms part of the German constitution. The debt brake limits how much debt the government can take on, and dictates that the size of the federal government's structural budget deficit must not ex...
The constitutionally enshrined debt-brake rule in its currently valid version determines that the federal government mustn’t take on more than 0.35% of GDP in new debt each year, and forbids any deficit for state governments. It can only be amended or scrapped with a ...
However, while showing openness to some minor reforms on applying the debt brake, such as calculating the cyclical adjustment and the repayment of the crisis-related debt, Lindner said that “at its core”, no changes to the constitutional rule were needed. Lindner's view was partly ...
Germany's strict rule for new borrowing, enshrined in the constitution, has been a major political point of controversy over the last few years. The rule, known as the 'debt brake', limits structural deficits of the federal government to 0.35% of GDP while forbidding structural deficits for...
Budgetary discipline;Debt brake;Expenditure ceiling;Federal Government Switzerland;Fiscal rule;Public debt Definition The terms debt brake or fiscal rule refer to constitutional provisions which, in the sense of a self-restraint, aim to oblige governments and parliaments to limit government budget defici...
In 2009, Germany introduced a new debt rule in its federal constitution (Grundgesetz). The socalled 'debt brake' prescribes a balanced budget for both the federal level and the states. However, the states have leeway regarding transposition and specification of the national requirements into their...
P.S. Ironically, IMF economists have repeatedly found that spending caps are the only fiscal rule with a good track record (see here, here, and here). Too bad the political hacks in charge of the IMF are unfamiliar with this research. Or, more likely, they simply don’t care since the...
That gives them the power to prevent any amendment to Germany’s debt brake, a rule enshrined in the constitution in 2009 to limit government borrowing and keep the structural deficit at 0.35 per cent of GDP. The same condition applies for creating a special off-balance sheet fund such as ...
Finally, Germany could simply decide to abolish the debt brake altogether, on the grounds that EU fiscal rules provide sufficient commitment to fiscal rectitude. It could complement the European guidelines with a national golden rule according to which for every euro of investment undertaken today, ...
2.Thereasonsforafiscalrule3 2.1Theemergenceofadeficitbias3 2.2AruleforSwitzerland5 3.Debtbrakemechanism6 3.1Objectiveandprinciplesoftherule6 3.2GeneralMechanism6 3.2.1Thecyclicaladjustment7 3.2.2Revenueandexpenditureestimates8 3.3Scopeoftherule9