Abstract

Some Reflections on the Path of Real Growth in the Federal Republic of Germany

1. The current weakness of real growth and the moderate tendency to recovery increasingly lead to the question which rate of growth realistically can be expected to take place in the medium run. If real growth rates are considered, a systematic. decline in growth has to be recognized though there may be some overlap of different kinds of adverse business waves. However, this is only true with respect to the development of the “rate” of growth, not the “level” of growth; the level of growth, expressed in absolute terms (billions of DM at constant prices), indicates the ability of an economy to produce an “increase” in national product from the year to the next. 2. An analysis of the development of this growth level over the post-war period shows that the economy’s growth path moved within a relatively narrow and stable band, except during the eighties. This is especially noteworthy as the basic conditions underwent considerable change over time. Nevertheless, it has to be noted that the growth path exhibits a tendency to decline since the mid-sixties. It is only due to an expansionary countermovement of economic policy that the growth band was not permanently undercut. When this policy was abandoned at the beginning of the eighties, it caused (or at least contributed to) the first more serious undercutting of the band. 3. Given these observations one cannot dismiss the possibility that the German economy moves along the descending segment of a Kondratieff. This could be explained from both, the supply side (decreasing rates of technological progress) as well as the demand side (a weakening ability and readiness to absorbe by society). If this is the case, then there is not much reason to expect an increase in the steepness of the growth band in the near future. Even to reenter the band the actual growth rate would have to jump during the coming years by more realistically can be expected. At best can be expected a return of the growth path to the previous slope in the medium run. However, the resulting average rates of growth (of 2 to 2,5 per cent) will not be sufficiently large to solve the pressing problems of the labor market