In the Shifting Shadows of Crisis: Pivot Points, Crisis Attribution, and Macro-Economic Policies under Grand Coalition

Abstract

This article seeks to explain why the second Grand Coalition was less ambitious in pursuing systemic transformation in macro-economic policy than its predecessor in 1966–69; why the biggest financial and economic crisis in post-war German history produced the seeming paradox of strengthening ordo-liberal ideas and practices (notably the ‘debt brake’) and shifting political discourse towards the centre-left; and why, in contrast to the first Grand Coalition, the Federal Chancellor rather than the Federal Finance Minister was the major political beneficiary. March 2003 and September 2008 emerge as the ‘pivot’ points in shifting trajectories of policy development. The article examines how the dynamics of crisis attribution, and how they differ in character post-2003 and post-2008, are decisive in understanding the direction of policy trajectories.