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<p>Since 2022, inflation and interest rates in Germany have noticeably increased. We examine the impact of heightened inflation and interest rates on the financial balances of municipalities in North Rhine-Westphalia. In our scenario analysis, we consider systematic differences between highly and less indebted municipalities. While there are positive effects on the revenue side that offset the higher costs on the expenditure side, such as some taxes being tied to nominal values, the analysis suggests that the overall effect on the financial balance is likely to be negative.</p>
</abstract>

Since 2022, inflation and interest rates in Germany have noticeably increased. We examine the impact of heightened inflation and interest rates on the financial balances of municipalities in North Rhine-Westphalia. In our scenario analysis, we consider systematic differences between highly and less indebted municipalities. While there are positive effects on the revenue side that offset the higher costs on the expenditure side, such as some taxes being tied to nominal values, the analysis suggests that the overall effect on the financial balance is likely to be negative.

Inflation and Interest Rates: Effects on Municipal Finances in North Rhine-Westphalia

Wirtschaftsdienst

This work is licensed under the Creative Commons Attribution 4.0 International License.

Inflation und Zinsen: Wirkungen auf die kommunale Finanzlage in Nordrhein-Westfalen

Since 2022, inflation and interest rates in Germany have noticeably increased. We examine the impact of heightened inflation and interest rates on the...

Inflation and Interest Rates: Effects on Municipal Finances in North Rhine-Westphalia

Published Online: Jan 23, 2024

Page range: 58 - 63

DOI: https://doi.org/10.2478/wd-2024-0018

© 2024 Désirée I. Christofzik et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.