It has become common practice to blame the rapid collapse of the German economy after its having reached a 3% GDP growth high in the year 2000 on the oil-price shock, the burst of the New Economy bubble and the overall slowdown of the world economy around this time. However, the exceptional decline is striking if one looks at the other European countries, in particular the member states of the European Monetary Union. Is this decline in fact the result of the negative fi scal demand shock to the German economy caused by the use of the UMTS licence auction revenues to service outstanding loans?
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