ABSTRACT
The problem of inflation dominated the discussion of economic policy issues in the Federal Republic of Germany during the 1970s, whereas it was not an important issue in the 1960s. This chapter contains several factors which explain this high variability. In the past few years attention has shifted from the inflation problem to the unemployment problem, because there has been a substantial increase in unemployment, unprecedented in post-war Germany. These issues will be dealt with in the following sections. These calculations of the structural component of unemployment may be considered an underestimate, because, first, they are based on actual employment figures, whereas it may be assumed that, because of unfavourable labour market conditions during the 1970s, job-seekers stopped applying for jobs. The primary motive for the rapid expansion of public debt by the federal government and the state governments has been the fight against unemployment, which was considered to be a cyclical phenomenon.
