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Photo: Green election program 2021, via dts news agency
Berlin (dts news agency) – After fierce criticism from various sides, the Greens also receive praise from some experts for their planned investment program. According to model calculations by the Institute for Macroeconomics and Economic Research (IMK) in Düsseldorf, the program could trigger a surge in growth for the German economy, writes the “Zeit”.
According to this, the German gross domestic product in the coming year would already be one percent above the level that it would reach without such a program. In 2040, economic output would then be four percent above the alternative scenario without the additional investments. In their election manifesto, which they passed over the weekend, the Greens propose additional government investment spending of 500 billion euros over the next ten years. The program is to be financed by higher borrowing, and the debt brake in the Basic Law is to be reformed.
The IMK has simulated the growth effects of the project with an internationally common macroeconomic model. Higher investments ensure more economic growth because the additional state money increases the demand for goods and services. In addition, the economy becomes more productive because, for example, energy costs are saved or bridges are being renovated. Because the gross domestic product is rising, the effects of credit on the government debt ratio are limited.
The government debt ratio – the share of debt in the gross domestic product – initially rises, but then falls again. In 2050 it will reach the level that would have been achieved without an investment program. “The loan-financed investment initiative proposed by Bündnis 90 / Die Grünen has the potential to noticeably increase German economic output without negatively affecting debt sustainability,” says the report by the union-affiliated institute.
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