The economic policy balance sheet of the era Merkel. An Erhardian perspective
The economic policy balance sheet of the era Merkel. An Erhardian perspective

Summary/Abstract: The paper takes stock of the economic policy balance sheet of the era Angela Merkel. It analyzes to what extent the positive economic indicators of her chancellorship is related to principles of economic policy Ludwig Erhard stood for and explains Merkel’s economic policy choices from a public choice perspective. The study shows that economic policy under Angela Merkel has drifted increasingly away from the legacy of Ludwig Erhard’s free market policy towards socially and ecologically motivated interventionism. It is contended that Germany’s current positive economic development is, therefore, actually the result of the labour market reforms of the previous chancellor Gerhard Schröder and the undervalued euro. The paper argues that Angela Merkel’s policy choices have been favoured by the incentives structure of the political system and the prevalence of the widespread belief of the population in the need and goo dof market regulations and redistribution. Yet, because of their stifling effects on economic dynamism these policies make Germany increasingly ill-equipped to tackle urgent economic challenges.

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