The German Recession from 2000-2005

The conventional wisdom (here, here, here, and here) is that the German economy was in recession from 2000-2005. Results from the DE20 model, however, show that the economy was well above the attractor (dashed lines above) from 1998-2009 when the recession really hit.

Conventional ideas about dating recessions are essentially based on drawing lines on time plots (the heavy red lines above) rather than modeling an attractor for the economy. The attractor analysis tells an entirely different picture of post-reunification German economic history. The conventional wisdom (here) led to neoliberal reforms in the welfare system and the labor market. The high growth rate after the reforms (2005-2008) was attributed to the success of neoliberalism. The supposed success was short-lived as the economy returned to its attractor. The farther the economy overshoots the attractor value, usually the worse the crash afterwards.