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<p>Fiscal rules in Germany and Europe have recently been the subject of controversial debate. This debate also hangs over the debt brake, which in Germany applies to both the federal and state governments. In the case of the states, it effectively hinders a&#xa0;second revenue-generating mechanism, since individual state governments already have little opportunity to autonomously manage their tax revenues. Distributional issues must primarily be decided on the expenditure side. But did the debt brake actually lead to the neglect of public investment? For all 16&#xa0;federal states and the period 1995–2024, we compile a&#xa0;panel dataset based on the cash statistics of public budgets. It contains compositional dependent variables that measure the extent to which state governments prioritize investments, personnel expenditures, operating expenses, and debt servicing. The underlying methodological approach is to explicitly model budgetary trade-offs and, using seemingly unrelated regressions, to depict the decision-making reality of politicians. As an independent variable, we use an index of fiscal self-commitment. We find no evidence that stricter debt limits have led to a&#xa0;crowding-out of public investment. Instead, state cabinets appear to be prioritizing personnel expenses and—to a&#xa0;lesser extent—investments in light of the debt brake, at the expense of current operating expenditure. This pattern is clearer for Social Democratic Party–led governments than for those with Christian Democratic Union/Christian Social Union–led majorities.</p>

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Schuldenbremse und haushaltspolitische Trade-offs in den deutschen Bundesländern – Effekte auf Investitions‑, Personal- und Sachausgaben

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年6月29日

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  • Kai Brumm,
  • Felix Hörisch,
  • Stefan Wurster

摘要

Fiscal rules in Germany and Europe have recently been the subject of controversial debate. This debate also hangs over the debt brake, which in Germany applies to both the federal and state governments. In the case of the states, it effectively hinders a second revenue-generating mechanism, since individual state governments already have little opportunity to autonomously manage their tax revenues. Distributional issues must primarily be decided on the expenditure side. But did the debt brake actually lead to the neglect of public investment? For all 16 federal states and the period 1995–2024, we compile a panel dataset based on the cash statistics of public budgets. It contains compositional dependent variables that measure the extent to which state governments prioritize investments, personnel expenditures, operating expenses, and debt servicing. The underlying methodological approach is to explicitly model budgetary trade-offs and, using seemingly unrelated regressions, to depict the decision-making reality of politicians. As an independent variable, we use an index of fiscal self-commitment. We find no evidence that stricter debt limits have led to a crowding-out of public investment. Instead, state cabinets appear to be prioritizing personnel expenses and—to a lesser extent—investments in light of the debt brake, at the expense of current operating expenditure. This pattern is clearer for Social Democratic Party–led governments than for those with Christian Democratic Union/Christian Social Union–led majorities.