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Market Constellation Research

A Modern Governance Approach to Macroeconomic Policy

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Edited By Arne Heise

The objective of this reader is manifold: On the one hand, it intends to establish a new perspective at the policy level named ‘market constellations’: institutionally embedded systems of macroeconomic governance which are able to explain differences in growth and employment developments. At the polity level, the question raised is whether or not market constellations can be governed and, thus, whether institutions can be created which will provide the incentives necessary for favourable market constellations. Finally, at the politics level, the immediate question is whether (distributional) vested interests can be bared in order to explain the motivations to create certain market constellations. A promising approach to tackle this task needs to take into account different cultural backgrounds and must provide political transmission mechanisms for turning vested interests into policy.

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Part II: Country Studies

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139 6 Is Germany Experiencing a New Economic Miracle?* Arne Heise 1. After Stagnation, an Economic Miracle? For quite a while now, the economic outlook has not given Germany reasons for optimism. After nearly a decade and a half of stagnation, unemployment here was higher than in nearly every other European Union nation, and the trend was distinctly worse than in broad swaths of Europe, and especially in comparison to the “liberal capitalist” economies in the USA, Great Britain, Ireland, or New Zealand. Germany appeared to be the big loser after the fall of the Berlin Wall, rapidly accelerating globalization and the advancing European integration. It was not until the reform of the “German model” via the introduction of the “Agenda 2010” that Germany appeared to finally begin preparing for a future as a service economy.1 It also finally took steps to improve its attractiveness to businesses, thanks to several tax cuts, primarily in corporate taxes and in income taxes for individuals in the highest income brackets. These policies, lauded with technocratic “TINA rhetoric” by the social democratic government, were not exactly well-received by the electorate.2 Nonetheless, today one of those responsible for these policies – Frank-Walter Steinmeier, the former foreign minister and former head of the chancellery – is openly touting these policies, asserting that the current economic upswing is the natural result of the Agenda 2010 policies. Furthermore, he boasts of a “new economic miracle.”3 * My gratitude goes out to Toralf Pusch and two anonymous referees for their valuable...

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