German spending will do little for global growth
A PUBLIC stimulus program in Germany would contribute little to lifting global growth, the Bundesbank said, shrugging off calls from eurozone partners for Berlin to increase its spending.
“It appears that a program of public spending in Germany would not be the most appropriate tool to help give a strong stimulus to the international economy,” the central bank said following a study into the issue.
Increased public spending would boost German domestic demand, and thereby trade with “some small and medium-size economies in the surroundings of Germany and in central Europe”.
But the effect would be “weak” for the eurozone’s biggest economies like France, Italy and Spain, said the Bundesbank, adding that it would also have little impact on Portugal and Greece.
The bank grounded its arguments in a study that simulated an increase in German public investments by up to 1 percent of gross domestic product over two years. –