Germany's parliament formally handed Angela Merkel a third term as Chancellor on Tuesday, leading an unlikely alliance of conservatives and socialists into four years of government.
Merkel is taking office three months after winning the September 22 election after the left-wing Social Democrats (SPD) voted in favor of joining her conservative alliance in a "grand coalition" at the weekend.
Irwin Collier, Professor of Economics at the Freie Universitaet in Berlin, told CNBC Merkel "needed the coalition to work."
"Angela Merkel needs continuity to keep her job. The voters wanted and got a grand coalition and at least for the economy they got a Hippocratic oath of 'do no damage,' so there's going to be a lot of continuity between what we've seen and what we're going to see," he told CNBC Europe's "Squawk Box" on Tuesday.
"As long as she shows this continuity and the German economy doesn't experience some sort of policy-induced shock, she's doing fine."
(Read more: Merkel III: Will the euro area be third time lucky?)
"Continuity" might be the buzzword for this new government but it is nevertheless an awkward fusion of Merkel's Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU) with their leftist rivals, the SPD -- that has only come about after protracted coalition negotiations.