Word: giersch
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Dates: during 1980-1989
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Among the countries hit hardest is West Germany, whose GNP actually declined at a .5% annual rate in the first quarter of the year. Nonetheless, Herbert Giersch, an economist at the University of Kiel, predicted that more stimulative government policies would push the growth rate to 2% for 1987 as a whole. The outlook may be bleaker for France, which is heavily dependent on such exports as aircraft and telecommunications equipment. Said Economics Professor Jean-Marie Chevalier, of the University of Paris Nord, who predicted a 1.3% growth rate this year for his country: "There is now a mood...
...continued European prosperity. Mast, for one, maintained that West German economic policy has been much too conservative. Said he: "Despite high unemployment and virtually stable prices -- factors that would suggest an expansionary policy -- the German government is stubbornly refusing to make any courageous move in that direction." Giersch pointed out, however, that the West German central bank had already increased the money supply to bring down interest rates and that a $7.6 billion tax cut scheduled for Jan. 1 would also help boost growth. He recommended that further tax reductions worth $10.8 billion, which are scheduled...
...help stimulate sluggish investment. High interest rates have discouraged many European companies from borrowing to build additional capacity or buy new equipment. Even cash-rich firms often hold back because they think they can earn a better return by lending out funds than by making capital investments. Complained Giersch: "We don't have enough investment because our firms would rather buy U.S. bonds...
WEST GERMANY. Since inflation has at least momentarily disappeared in West Germany (prices actually fell by 1% in 1986), many economists believe the $ Germans have plenty of latitude to try to boost their 2.75% growth rate. Herbert Giersch, director of the Institute of World Economics at the University of Kiel, suggested that Bonn should bring forward tax cuts now planned for January 1988. Such stimulus is needed, he said, because a rising mark could play havoc with West Germany's export industries. Giersch predicted that the country would be lucky to achieve a 2.5% growth rate...
...some negative side effects. During 1986 the climb in the mark's value reduced the cost of imported oil and other industrial materials and helped companies afford a 4.5% wage hike for employees. But similar wage demands this year could become a heavy burden if the mark stops rising. Giersch voiced fears that pay increases could cut profits, dampen investment and lift the inflation rate to 3%. He suggested that Bonn should strike a deal with the labor unions, in which the government would cut taxes by 5% in exchange for wage restraint...