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Article: Thrift for thrift's sake; West Germany's government is right to worry about inflation, wrong to tighten its fiscal policy. (editorial)
- Article from:
- The Economist (US)
- Article date:
- January 16, 1988
CopyrightCOPYRIGHT 1988 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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West Germany's government is right to worry about inflation, wrong to tighten its fiscal policy
THE American Treasury's verdict on West Germany's new plan to raise taxes and cut public spending next year is not hard to guess. The Treasury will see it as another perverted twist in a policy designed to solve a problem that no longer exists-high inflation-at the cost of stunted growth and continuing imbalances in world trade. The Treasury's conclusion, that West Germany should let its budget deficit rise over the next two years, is right. But it is important to understand why its reasons for saying so are mostly wrong.
The argument between America and West ...