The Case for Putting a Public Investment Clause into the German Debt Brake

In this article, I explore the need for reform of the German debt brake to incentivize public investment. I approach the issue from multiple angles: assessing elite support for debt brake reform among policymakers and economists, examining empirical evidence on the impact of fiscal rules on public investment, exploring the conceptual basis for prioritizing public investment within fiscal rules, and presenting a reform proposal put forth by the Scientific Advisory Board of the German Ministry of Economic Affairs and Climate Action.