The law to the promotion of stability and the growth of the economy (stability and growth law, StWG) from the year 1967 embodied goals and instruments of an inquire-oriented economic policy into Deutschland.Das defined final goal is an overall economic equilibrium, which is in practice not possible however due to the restrictions clarified in the uneasy square in its completed form.

Contents of the law

In its first paragraph it determines overall economic goals, which are to consider public households in Germany with their decisions.

• Price level stability
• high level of employment
• externaleconomical equilibrium
• with appropriate and constant economic growth

These goals are well-known as uneasy square of the economic policy, magically, because all four goals cannot be reached at the same time conflict-free.

The goals were actually as equally meant; however an outstanding position is granted by the European right to price level stability (see kind 4 exp. 2 and 105 EGV, kind 88 sentence 2 GG)

The designation stability in the name of the law refers to the fact that an even growth without larger fluctuations is to be obtained. Herein in the sixties ideas of the global control controlling the politico-economic discussion come to the expression, which is to consequence the state able to adjust by the employment of politico-economic instruments fluctuations relating to market conditions. The systematic influence of the economic goal sizes mentioned should the economic policy toward one at John May pool of broadcasting corporations Keynes oriented process politics to shift. The law developed under the leadership of Federal Minister Karl Schiller.

How can reaching these goals be (Operationalisierung)

The reaching of these politico-economic goals is not fixed in figures, however there is the possibility of specifying indicators for their reaching. Between the qualitative, the quantitative and temporal Operationalisierung is differentiated.

Qualitative Operationalisierung

An indicator is looked for, which seizes the selected goal if possible "valid", i.e. in its whole meaning. An example of "constant and appropriate growth" would be the gross domestic product.

Quantitative Operationalisierung

For an indicator a value is intended, with whose reaching the goal linked over the qualitative Operationalisierung is regarded as reached. Example: With a growth GROS DOMESTIC PRODUCT from 0,5 to 3.5 per cent applies the goal of "constant and appropriate growth" as reached.

Temporal Operationalisierung

Here the period is defined, in which via qualitative Operationalisierung a linked indicator is to achieve the value specified over the quantitative Operationalisierung. Example: With a growth GROS DOMESTIC PRODUCT from 0,5 to 3.5 per cent in one business year applies the goal of "constant and appropriate growth" as reached.

Instruments of the StWG

As instruments for reaction to fluctuations relating to market conditions with the StWG were introduced:

• the economic situation balance reserve: with their in times of the boom a part of the tax receipts is shut down; in recession phases these reserves are dissolved and used for demand programs;
• the economic situation addition to the coming in and body expensive: In times of the boom the taxes will become temporarily increased and in recession phases these funds the taxpayers returned.

In addition the medium-term financial plan was introduced and the financial plan advice, in which federation, countries and municipalities co-ordinate its expenditure plans.

In the concentrated action discussed government, trade unions, employers' associations and Federal Bank politico-economic topics and tried to consent solutions to come. The concentrated action failed to end of the seventies because of the controversy over operational participation.

Related links

• Legal text (pdf)
• Critical considerations to the StWG demanded "appropriate growth" on the sides of Greenpeace

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