An End to the Reform Logjam? The Reform of German Federalism and Economic Policy-Making

Abstract

The paper discusses the effects of the first step of the reform of German federalism on economic policy-making. It turns out that the overall ratio of bills needing Bundesrat approval to all bills decreases substantially, but the necessity of Bundesrat approval for key decisions in economic policy is unlikely to decrease due to the reform (with the exception of health care reforms). Furthermore, it is argued that even if the reform were to reduce the need of Bundesrat approval to a larger extent than expected here, the permanent electoral campaign in which German governments find themselves continues to make coherent and far-reaching reforms difficult. Therefore, the politics of German economic policy are unlikely to change fundamentally in the near future.