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JEL Classification
H50
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Fiscal Policy & National Budgets
Germany
In the context of the federal budget, the importance of financial aid, social spending and legacy burdens stands out. In most cases, subsidies do not serve to internalize external effects and even Pigouvian subsidies are economically problematic because the state lacks the knowledge about the right dosage. Redistribution activities dominate, while expenditures on original public tasks in the form of the production of public goods recede into the background, although this is precisely where the state's legitimacy lies.
