Are we seeing ‘peak’ Germany? Why we should be cautious before recommending Merkel and Schröder to other countries. CEPS Commentary, 7 September 2017

Beblavý, Miroslav (2017) Are we seeing ‘peak’ Germany? Why we should be cautious before recommending Merkel and Schröder to other countries. CEPS Commentary, 7 September 2017. [Policy Paper]

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Abstract

There is a well-known phenomenon called the “skyscraper index” that relates the number and height of skyscrapers to the economic cycle.[1] At the peak of a bubble, ground is broken for the start of construction of the most ambitious projects. In the same manner, one can observe a tendency in the international community of policy-makers, journalists and academics to advocate policies akin to those adopted by countries that display all the signs of enduring success, just prior to taking a major stumble. This is particularly worrying if this tendency leads other countries to undertake similarly radical changes in their own policies that might not have the expected salutary effect.

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