Stabilization Policy in France and the Federal Republic of Germany

The object of this book is to compare the macroeconomic characteristics of the French and German economies. It focusses on the effect of stabilization policy and of international disturbances and tries to find out the trade-offs of economic policy. The study is based on a simulation analysis using large-scale econometric models of the two countries. Instead of using models as black boxes the dynamic structures are compared in considerable detail. This entails decomposing the models into blocs of strategic sets of equations. Comparing bloc by bloc allows one to distinguish between the contribution of various economic processes (price-wage dynamics, monetary mechanism, multiplier-accelerator interaction) to macroeconomic performance.Main features: Franco-German comparison of macroeconomic response to policy measures and international shocks; Evaluation of policy trade-offs; Detailed institutional and historical background to macro-policy in France and Germany.