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Germany’s enduring current account surplus

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Intereconomics

Abstract

The Federal Republic of Germany’s balance of payments has been in the black for years, a record unparallelled by any other major country since the Second World War. Proceeding from status quo assumptions, the surpluses are unlikely to decline in the medium term, either.1 Can they be endured? Do they really pose no serious problem, as current debate on national economic policy suggests?

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References

  1. The German surpluses are higher today than they were more than a decade ago, when Kindleberger dealt with the same topic; cf. C. Kindleberger: Germany’s Persistent Balance-of-Payments Disequilibrium Revisited, in: Banca Nazionale del Lavoro, Quarterly Review, Vol. XXIX, 1976.

  2. Cf. G. Fels: Der Standort Bundesrepublik Deutschland im internationalen Wettbewerb, and E. Wohlers: Internationale Wettbewerbsfähigkeit, Wechselkurse und Außenhandel—einige Anmerkungen zur gegenwärtigen Diskussion in der Bundesrepublik, both in: Hamburger Jahrbuch für Wirtschafts- und Gesellschaftspolitik, No. 33, 1988.

  3. Cf. 1989 Annual Economic Report of the Federal Government, Federal Ministry of Economics, Nos. A I 5 and A II 11, and the Annual Report of the Council of Economic Experts 1988/89, section nos. 217, 231 and 232.

  4. The absorption approach is now an indispensable part ofany balance of payments theory. For a contemporary assessment cf. H. Flassbeck: Preise, Zins und Wechselkurs, Walter Eucken Institut Freiburg i. Br., Wirtschaftswissenschaftliche und Wirtschaftsrechtliche Untersuchungen, 1988.

  5. Fur further discussion cf. E. Neuthinger: Anatomie eines Wachstumspfades—Zur wirtschaftlichen Entwicklung in der Bundesrepublik Deutschland seit 1983. Rückschauende Analyse, Ausblick und wirtschaftspolitische Bewertung, in: Konjunkturpolitik, Vol. 34, No. 4, 1988.

  6. On the fiscal theory of the balance of payments cf. E. Milne: The Fiscal Approach to the Balance of Payments, in: Economic Notes, Monte dei Paschi die Siena, Vol. 6, 1977; W. Leibfritz: Staatsdefizit und Zahlungsbilanz, in: Ifo-Schelldienst 35–36/88; and Reinhard Pohl: Staatsdefizite und Zahlungsbilanz, in: W. Filc, L. Hübl, Rüdiger Pohl (eds.): Herausforderungen der Wirtschaftspolitik, Festschrift für Claus Köhler, 1988.

  7. The absorption or savings/investment approach has recently been applied by Turner to analyze the current accounts of the seven major countries of the OECD; cf. P. Turner: Savings, Investment and the Current Account: An Empirical Study of Seven Major Countries 1965–84, In: Bank of Japan, Monetary and Economic Studies, Vol. 4, No. 2, October 1986.

  8. On the profit enhancing impact of trade surpluses, cf. A. Oberhauser: Änderungen in der Einkommensverteilung und Zinsbildung. Eine notwendige Ergänzung der Zinstheorie, in: W. Filc, L. Hübl, Rüdiger Pohl (eds.), op. cit. Herausforderungen der Wirtschaftspolitik, Festschrift für Claus Köhler, 1988. A. Oberhauser: Verstöße gegen die Saldenmechanik. Bemerkungen zum Gutachen “Gewinn, Investitionen und Beschäftigung” des Wissenschaftlichen Beirats beim Bundesministerium für Wirtschaft, in: Finanzarchiv, New Series, Vol. 46, No. 2, 1988; and E. Neuthinger, op. cit.

  9. Cf. B. Kauffmann and J. Scheide: Die amerikanischen Defizite im Kreuzfeuer der Kritik, in: Kiel Discussion Papers, No. 150, March 1989. The Council of Economic Experts also assesses the net capital exports of the Federal Republic of Germany positively, but questions the desirability of the high German current account surpluses or capital exports (Annual Report 1988/89, section nos. 231 and 232).

  10. Cf. C. Kindleberger, op. cit. Germany’s Persistent Balance-of-Payments Disequilibrium Revisited, in: Banca Nazionale del Lavoro, Quarterly Review, Vol. XXIX, 1976.

  11. Cf. inter alia International Monetary Fund: World Economic Outlook, October 1988; and OECD: Economic Outlook, No. 44, December 1988.

  12. Cf. J. Sachs: Global Adjustment to a Shrinking U.S. Trade Deficit, in: Brookings Papers on Economic Activity, No. 2, 1988.

  13. Cf. P. Turner, op. cit. Savings, Investment and the Current Account: An Empirical Study of Seven Major Countries 1965–84, in: Bank of Japan, Monetary and Economic Studies, Vol. 4, No. 2, October 1986.

  14. Cf. OECD: Economic Outlook, No. 44, December 1988.

  15. Cf. R. Z. Lawrence: Comments on Sachs, in: Brooking Papers …, op. cit.; and OECD: Economies in Transition, Structural Adjustment in OECD Countries, 1989; on the relationship between financial innovations and monetary policy cf. H.-J. Dudler: Geldmengenpolitik und Finanzinnovationen, in: Kredit und Kapital, Vol. 19, No. 4, 1986.

  16. Cf. E. Neuthinger: Die Ursachen der Nachfragedynamik 1988, in: Wirtschaftsdienst, Vol. 68, No. 12, 1988.

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  1. Bonn, West Germany

    Egon Neuthinger

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  1. Egon Neuthinger
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Neuthinger, E. Germany’s enduring current account surplus. Intereconomics 24, 138–148 (1989). https://doi.org/10.1007/BF02928565

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