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Type	Working Paper
Scope	Discipline-based scholarship
Title	Growing like Germany: local public debt, local banks, low private investment
Organization Unit	Department of Economics (Florian Scheuer)
Authors	Mathias Hoffmann Iryna Stewen Michael Stiefel
Language	English
Institution	University of Zurich
Series Name	Working paper series / Department of Economics
Number	380
ISSN	1664-705X
Number of Pages	36
Date	2023
Abstract Text	Over 2010-2016, municipal debt in Germany crowded out private investment worth 1 percent of GDP. Forced to lend to municipalities by their statutes, local public banks compensated for declining municipal-debt yields by charging higher rates to firms in Germany’s locally segmented credit markets. The ensuing crowding out was made worse by increased municipal borrowing when expensive fiscal commitments were shifted from federal and state to the municipal levels following the introduction of the debt brake. Our results identify new channels through which low interest rates adversely affect real outcomes and locally segmented credit markets can amplify contractionary effects from fiscal austerity.
Related URLs	https://cepr.org/publications/dp15912 https://publications.bof.fi/handle/10024/48158 https://www.cesifo.org/en/publications/2021/working-paper/growing-germany-local-public-debt-local-bank-low-private-investment https://www.econ.uzh.ch/en/research/workingpapers.html
Other Identification Number	merlin-id:20862
PDF File	Download from ZORA
Export	BibTeX EP3 XML (ZORA)
Keywords	Local public finance, firm-level investment, crowding out, fiscal austerity, fiscal rules, global and intra-European imbalances
Additional Information	Revised version. Auch publiziert als Bank of Finland Research Discussion Paper No. 9/2022, CESifo Working Paper No. 9496 und CEPR Discussion Paper 15912.