German Chancellor Angela Merkel observes a minute of silence for the victims of the Germanwings plane crash, during a session of the Bundestag, the lower house of parliament, in Berlin March 26, 2015. REUTERS/Hannibal Hanschke
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In Germany there's no such thing as guilt-free borrowing.Public investment has fallen as a share of German government expenditure to just above 10 percent from 14 percent at the start of the 1990s.A December study by Selim Elekdag and Dirk Muir, economists at the International Monetary Fund, calculated that state spending of 0.5 percent of gross domestic product for four years would boost GDP by 0.75 percent.So why won't Merkel loosen the purse strings? As she aims to keep a balanced budget through the 2017 election, the argument is that the economy is doing well without stimulus, a debt equivalent to 72 percent of GDP requires paring to meet eurozone rules and an aging population requires savings now.
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