Horn, Gustav, (2017), “How To Get Rid Of Germany’s Excessive Current Account Surplus”, Social Europe, 26 June
The demand is frequently made that wages in Germany should grow more strongly than up till now. The hope is that this would raise the price of exports and, thereby, foreign demand for German goods would drop. This alone would reduce the surplus in the current account. There would be an even stronger effect on the import side of the equation. This stronger wage dynamic would make incomes rise more powerfully. That in turn would raise domestic demand for imported goods, again reducing the surplus.
Relevant Posts
- Mattern, Frank, Mischke, Jan, (2017), «Turning Germany’s ‘bad’ trade surplus into a good experience for all (including Germans)», VoxEU, 21 June
- Davies, Howard, (2017), «Understanding The Productivity Puzzle», Social Europe, 26 June