Germany’s Federal Election: German Economists Assess Possible Coalitions
Current forecasts for the outcome of the German federal election on September 26, 2021, indicate that there could be many different coalition options after the election. This raises the question of which coalition would likely achieve the most favorable economic development in Germany over the coming legislative period. In addition to the effects of the various coalitions on the economic yardsticks of economic growth, unemployment, public debt, and income inequality, the economics professors in the 36th ifo and FAZ Economists Panel were also asked to consider the impact on carbon emissions over the next legislative period. For each of these measures, respondents were asked under which coalition the highest and lowest levels could be expected at the end of the next legislative period. A total of 153 economics professors at German-speaking universities participated.
Economists Expect Highest Economic Growth under a Black/Yellow Coalition
When asked under which of the possible coalitions they expect to see the highest economic growth at the end of the next legislative period, 44 percent of the participating economists named the coalition of the CDU/CSU and the FDP (Black/Yellow). In joint second place, with 18 percent each, came the coalitions of the SPD, Greens, and FDP (traffic light coalition) and the CDU/CSU, Greens, and FDP (Jamaica coalition). The remaining votes went to the SPD and Greens (Red/Green, 7 percent), CDU/CSU and Greens (Black/Green, 6 percent), SPD, CDU/CSU, and FDP (Germany coalition, 4 percent), SPD, Greens, and Left (Red/Green/Red, 2 percent), and SPD, CDU/CSU, and Greens (Kenya coalition, 1 percent). The current governing coalition of the SPD and CDU/CSU (grand coalition) was not mentioned.
Lowest Economic Growth Expected under Red/Green/Red
When asked the opposite question, i.e., which coalition the participating economists associate with the lowest economic growth at the end of the next legislative period, the economists’ opinion is clear: more than four-fifths expect the lowest economic growth under a Red/Green/Red coalition. Black/Yellow came in a distant second (6 percent), followed by the grand coalition and the German coalition (each 4 percent). Red/Green and the Kenya coalition received no votes.
Economists Expect Highest Unemployment Rate under Red/Green/Red
A good three-quarters of the participants predict that, at the end of the next legislative period, the unemployment rate would be highest under a Red/Green/Red coalition. One-eighth of the vote went to the Black/Yellow coalition. The grand coalition followed in third place (6 percent). The remaining potential coalitions each received less than 3 percent of the vote.
Economists Expect Lowest Unemployment under Black/Yellow
As expected, the reverse question about the coalition with the lowest expected unemployment at the end of the next legislative period reveals a different picture: Black/Yellow took first place with a good two-fifths of the vote. Other participating economists suggest that the lowest unemployment rate would be achieved by either the traffic light coalition or the Jamaica coalition (15 percent each). They are followed by Red/Green, Red/Green/Red, and Black/Green, each with 6 percent.
Highest Public Debt Ratio Expected under Red/Green/Red
With a clear majority of 86 percent, respondents expect a Red/Green/Red coalition would deliver the highest public debt ratio at the end of the next legislative period. Black/Yellow landed in second place with 8 percent. The remaining potential coalitions each received less than 3 percent of the vote.
Economists Expect Lowest Public Debt Ratio under Black/Yellow
When asked which coalition could be expected to have the lowest public debt ratio at the end of the next legislative period, almost three-quarters of the participating economists named Black/Yellow. The Jamaica coalition received 9 percent of the vote on this question, while 5 percent of the vote went to the traffic light coalition. The remaining coalitions received 3 percent or less of the vote.
Economists Expect Highest Net Income Inequality under Black/Yellow
Around 70 percent of the participants expect that net income inequality would be highest at the end of the next legislative period under a Black/Yellow coalition. A good tenth of the economists answered Red/Green/Red. Next came the Jamaica coalition (6 percent) and Black/Green (5 percent). The remaining coalitions received 3 percent or less of the vote.
Expected Net Income Inequality Lowest under Red/Green/Red
Around 55 percent of participating economists expect that net income inequality would be lowest at the end of the next legislative period under Red/Green/Red. Next, and almost level across the board, came the traffic light coalition with 8 percent, the Red/Green, Black/Yellow, and grand coalitions with 7 percent each, and the Kenya coalition with 6 percent. The Germany and Jamaica coalitions each got 4 percent of the vote.
Economists Expect Highest Carbon Emissions under Black/Yellow
A majority of the participants – 56 percent – expect that a Black/Yellow coalition would lead to the highest carbon emissions at the end of the next legislative period. One-quarter of the participants expect this would be the case for the grand coalition. The traffic light coalition was mentioned by one-tenth of the participants. Red/Green/Red received 6 percent of the vote. The remaining potential coalitions each got less than 2 percent of the vote.
Lowest Carbon Emissions Expected under Red/Green
Almost two-fifths of participating economists expect that a Red/Green coalition would lead to the lowest carbon emissions at the end of the next legislative period. Next came Red-Green-Red with 17 percent of the vote, the Jamaica coalition with 15 percent of the vote, and the traffic light coalition with 12 percent of the vote. One-tenth of participants’ votes went to Black/Green and 7 percent to Black/Yellow. The remaining three potential coalitions each got less than 2 percent of the vote.
Economic Development After the German Federal Election: Will It Matter Who Governs?
ifo Institut, München, 2021
ifo Schnelldienst, 2021, 74, Nr. 10, 82-87
