Macroeconomic Analysis of Germany Essays

Macroeconomic Analysis of Germany Essays Macroeconomic Analysis of Germany Essay Macroeconomic Analysis of Germany Essay Its goal was to boost the relatively low economy by stimulating people to spend and consume. However, due to a general Insecurity in the population and the peoples lack of confidence, consumption failed to amplify, as hoped, despite the Increase in disposable income. In addition, despite the Reform, after its implementation, investment also slightly decreased. The lowering of the interest rates by 275 basis points in 2001 increased the money supply and led to a higher consumption, which positively reflected on the GAP growth. However, the lower Interest rates were not able to accelerate Investment and employment. Nevertheless, the Euro appreciated against the US Dollar, which In turn ad a positive influence, as exports and imports maintained their growth. After continuous depreciation of the Euro against the Dollar, up until its all-time low at the end of October 2000, the CB, along with the US and Japanese monetary authorities, intervened and increased the interest rates twice, both by 0,25%. By doing so they could first avoid a threat of an Increase of domestic prices due to inflation and also augment Imports due to the appreciation of the Euro. Furthermore, the skyrocketed foreign direct Investment In 2000 was reduced by 182. 52 billion Euros In 2001 The opening of a single market in 1 993 had an overall positive influence on the German economy, especially in the trade sector, where exports increased by 10,6% until 2002, totaling 660,6 billion Euros.