Cite JOURNAL ARTICLE
Strukturelle Fehlentwicklungen in der Wirtschaft der Bundesrepublik Deutschland
Credit and Capital Markets – Kredit und Kapital, Vol. 9 (1976), Iss. 1 : pp. 1–23
Structural Misdevelopment in the Economy of the Federal Republic of Germany
This contribution considers the present economic situation in Germany against the background of long-term development. The recession in 1966/67 is described as a caesura in postwar development. Misdevelopments in income distribution, in production structure and in public finance impede recovery from the latest recession and prevent any rapid reduction of unemployment. With regard to income distribution the rise ın the wage share is emphasized, and it is shown that as a result both re-employment of non-utilized capacities and creation of new jobs are hindered. The misdevelopment in production structure is considered to lie in the fact that in the Federal Republic of Germany branches of production and production methods were preserved on account of a false DM exchange rate, although they are no longer competitive internationally in view of the domestic wage level that has been reached. The high level of government borrowing in the past year - and perhaps also in the current year - was defensible and desirable from the standpoint of trade cycle and capital market policy, as private demand for credit was very low owing to the small volume of investment in industry and housing construction. Growing difficulties will be encountered, however, if private demand for credit increases again with the acceleration of economic activity and government credit needs - only a minor part of which is due to the cyclical trend - are not reduced accordingly. Hence there is a danger that a future expansion may be slowed or stopped prematurely by rising interest rates.