This article highlights significant risks to Germany’s public investment, especially at the local government level, where funding issues, labor shortages, and red tape delay infrastructure projects. Despite the massive 500 billion euro spending plan, these bottlenecks could slow implementation and temper near-term euro strength. Structural reforms to give local councils more financial control seem essential.
Given these challenges, will Germany be able to deliver on its infrastructure promises soon enough to support sustained economic growth?
Not aware of any studies differentiating between local and federal spending. Infrastructure investment tends to have high multipliers and most of that is done by local government. On the other hand, local provides a lot of transfers, which tends to have low multipliers. So overall the local spending multiplier may be about average would be my best guess.
This article highlights significant risks to Germany’s public investment, especially at the local government level, where funding issues, labor shortages, and red tape delay infrastructure projects. Despite the massive 500 billion euro spending plan, these bottlenecks could slow implementation and temper near-term euro strength. Structural reforms to give local councils more financial control seem essential.
Given these challenges, will Germany be able to deliver on its infrastructure promises soon enough to support sustained economic growth?
Where is the fiscal multiplier stronger, under federal or local spending? Or is there a distinction
Not aware of any studies differentiating between local and federal spending. Infrastructure investment tends to have high multipliers and most of that is done by local government. On the other hand, local provides a lot of transfers, which tends to have low multipliers. So overall the local spending multiplier may be about average would be my best guess.