German, U.S. programs vary greatly

March 27, 2009 at 9:02 AM
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BERLIN, March 27 (UPI) -- Economic stimulus measures in the United State and Germany are a contrast in style and in size, an economist in London said.

"While the magnitude of stimulus has been much less in Europe's case, the stimulus has been getting much better traction in Europe than in the United States so far," said Barlays Capital economist Julian Callow.

In Germany, stimulus comes in the form of a program known as Kurzarbeit, which pays two-thirds of a worker's lost wages when companies cut back.

Businesses opting for the program, which translates as "short week," can move a worker to part-time without the disruption of a permanent layoff.

Germany has also provides about $3,400 to consumers who trade in old vehicles for new ones and raised the monthly payments for 20 pensioners.

Germany's stimulus spending for 2009 is equal to 1.5 percent of the country's gross domestic product, compared to 0.7 percent in France and 2 percent in the United States.

German Chancellor Angela Merkel argued the surgical approach is more effective. But, Adam Posen, the deputy director of the Peterson Institute for International Economics said Germany, "as a hugely export dependent economy" has more to gain from stimulus bills passed in other countries.

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