ABSTRACT Politicians disagree about fiscal policy. This disagreement should have economic effects beyond the effects of government spending and taxation. We use the full set of speeches in the German Bundestag since 1960 and apply state‐of‐the art natural language processing techniques to construct two series of fiscal disagreement starting in 1970: disagreement about fiscal policy between the government and the opposition and disagreement within the coalition government. Both series fluctuate strongly and peak in 1982/83, but are also notably different from each other. In a VAR analysis, we show that within‐coalition disagreement has adverse effects on real activity. Higher disagreement causes a drop in industrial production, manufacturing orders and stock prices. In contrast, government‐opposition disagreement does not affect the business cycle.