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Abstract
Despite some similarities reflecting common historical roots, in many respects the fiscal system of the German Democratic Republic (GDR) differed fundamentally from that of the Federal Republic of Germany (FRG), both in role and in scope. In the FRG, fiscal policy is geared toward supporting market processes within a social market economy. It is democratically controlled with a federative structure that offers considerable fiscal autonomy to the lower levels of government. In the former GDR, fiscal planning played a pervasive role in the context of a command economy, essentially uncontrolled by the people and burdened with complex and at times conflicting political objectives. It was highly centralized, granting little if any fiscal autonomy to the lower levels of government.
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