Germany can boost euro-area growth by borrowing more: ECB study

Frankfurt

GERMANY could give itself and the euro area a boost if it takes advantage of low interest rates to finance a public-investment programme, the European Central Bank (ECB) said.

That's the key finding from an ECB study released on Monday that simulates the effect of an expansion of public investment equal to one per cent of gross domestic product over five years in a large euro-area country such as Germany. It concludes that the stimulus would have a greater impact if it were financed by debt or higher revenue and accompanied by an expansive monetary policy.