Large-Scale and Green? The German Covid-19 Stimulus Package in International Comparison

ABSTRACT

The Covid-19 pandemic is a major global crisis the impact of which is likely to exceed the upheavals caused by the last financial and economic crisis of 2008/2009. Germany as an export-oriented economy faces tremendous economic threats in the aftermath of the pandemic such as the collapse of global supply chains, the lockdown of economic sectors and impending job losses. As a reaction, the German government adopted, much as in the previous financial crisis, fiscal stimulus packages as part of a Keynesian-style public spending programme to stabilise its economy. Yet, in addition, the German government explicitly conceptualised its reactions as part of a ‘Package for the Future’ (Zukunftspaket), interlinking it with the second big global challenge: climate change and environmental degradation. We evaluate the German stimulus package on both these goals by comparing it with stimulus packages passed in other G20 countries. Based on a Qualitative Comparative Analysis (QCA) added by a case study of Germany, we identify the driving determinants behind the fiscal policy reactions with regard to the size of the stimulus package as well as its contribution to adopt long-term environmental transformations.

Acknowledgements

The authors thank the two anonymous reviewers for there valuable and constructive comments on earlier versions, and Kai Oppermann who served as corresponding editor for steering the process. We also want to thank Margareta Maier, Sarah Kluge and Leonardo Giannotti (all TUM) for their help in data collection and proof reading.

Disclosure statement

No potential conflict of interest was reported by the author(s).

SUPPLEMENTARY DATA

Supplemental data for this article can be accessed via the authors’ researchgate pages https://doi.org/10.1080/09644008.2022.2078964.

Notes

1 We present alternative analysis for different treatments of these six cases in Section A5 in the Supplemental Data. In a nutshell, results are largely stable and the findings in this study include the core conditions which are also included in alternative models. However, it also highlights that additional conditions might play a role.

2 Besides these four factors, we have also tested the inclusion of further potentially relevant conditions in our model, for example, GDP per capita or political regime type (degree of democracy or autocracy). Because the inclusion of four conditions leaves us with 24 = 16 possible combinations of conditions while we empirically focus on the twenty G-20 states we have decided to keep our model and the analysis straightforward and concentrate on these four most important factors and conditions. Further research as part of in-depth studies or encompassing a higher number of cases could address further potential influential factors like the influence of unions or institutional constraints among others.

3 All technical details are described in the RScript. In the Supplemental Data, we present the data and additional analysis. The supplemental data can be accessed through the authors’ researchgate pages.

4 A PRI value around 0.5 draws attention to simultaneous set relations since the consistency score for the outcome and non-outcome are very similar.

5 The other two strategy are the following: the parsimonious strategy is driven by the objective to produce minimally sufficient conditions and therefore includes all logical remainders that lead to more parsimonious results, whereas the complex strategy counterfactually assumes that all logical remainders are insufficient and hence excludes them all from the minimisation.

6 The parsimonious strategy produces model ambiguity and points to potential alternative combinations of conditions. We present these results in Table A16.

7 If we exclude the six cases from the analysis which contain no clear green or brown measures in their FSP, a second term covering Canada and Spain appears in addition to the one term identified here. As further outlined in Supplemental Data A5, it shows that FSPs with a positive green-brown balance are passed in settings with a high existential risk, a pro-environment government and high state capacity.

8 The only exception to this was the coal phase-out process that was however initiated before the pandemic. The ‘Coal Phase Out Act’ from July 2020 provides funding for the phase out of coal-fired power plants in Germany by 2038 and even so it does allocate funds to fossil fuel producers, one can argue that it is a ‘bailout with green strings attached’, since it includes an ultimate closure of coal plants (Vivid Economics 2021, 51).

Additional information

Notes on contributors

Felix Hörisch

Felix Hörisch is Professor for Social Sciences, Social Policy and Education Policy at the University of Applied Sciences in Saarbrücken. His research interests include comparative policy analysis, political economy, labour market, social, asylum and fiscal policies as well as political strategies and QCA methodology. His work has been published in journals such as Comparative European Politics, European Political Science, Journal of Comparative Policy Analysis and Social Policy & Administration.

Stefan Wurster

Stefan Wurster is Assistant Professor for Policy Analysis at the TUM School of Social Sciences and Technology in Munich. He conducts research in areas closely linked to sustainability such as education, research and energy policy. His specific research interests include the comparison of democracies and autocracies as well as policy regulation. His work has been published in journals such as Contemporary Politics, Global Policy, Energy Policy, Big Data & Society, Politische Vierteljahresschrift, Swiss Political Science Review and Journal of Environment and Development.

Markus B. Siewert

Markus B. Siewert is Senior Researcher and Lecturer at the TUM School of Social Sciences and Technology in Munich. His research interests lie in the areas of party competition, government performance and policy regulation with a focus on policies and governance linked to the digital transformation. Moreover, he has a strong background in case-oriented research methods like QCA. Recent work has been published in Big Data & Society, Comparative Political Studies, European Journal for International Relations, European Political Science Review, International Political Science Review, Policy & Politics and PS: Political Science & Politics.