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1. The Macroeconomic Imbalance Procedure and Germany: When is a current account surplus an 'imbalance'?

Author:
Daniel Gros and Matthias Busse
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The Macroeconomic Imbalance Procedure (MIP) was designed to prevent the emergence of imbalances like the large and persistent current account deficits that occurred in Spain and Ireland. But within this mechanism, a current account surplus is also viewed as a source of concern. Indeed, last year's Alert Mechanism Report (AMR), issued by the European Commission signalled an excessive current account surplus for the Netherlands and Luxembourg, while Germany just barely scraped by with a 5.9% surplus, marginally evading the 6% threshold (over a 3-year average). With the most recent report, however, Germany's status has changed. Along with the Netherlands and Luxembourg, it too has now been singled out as a euro-area country with a surplus above the upper threshold.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

2. A Sovereign Wealth Fund to Lift Germany's Curse of Excess Savings

Author:
Daniel Gros and Thomas Mayer
Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
For most of the time since the early 1950s, national savings in Germany have tended to exceed national investment, resulting in a current account surplus. Most of these excess savings have been intermediated by the domestic banking system, which has had difficulties investing these German surpluses abroad given that it is prohibited by law from taking any exchange rate risk. This tended to keep the surplus within limits most of the time (less than 1- 2% of GDP). With the advent of the euro, however, German surpluses could become much larger and seem now to have become structurally engrained at 6% of GDP, or over one-quarter of savings. Since the start of the euro crisis, German private savers have repatriated their investments – effectively unloading their exposure onto the public sector as German banks have deposited hundreds of billions of euro at the Bundesbank. These funds are being lent by the ECB to banks in the euro area periphery (at 75 bps) – ensuring effectively a negative real return.
Topic:
Economics, International Trade and Finance, Markets, and Sovereign Wealth Funds
Political Geography:
Europe and Germany

3. Do Germans support the euro?

Author:
Daniel Gros and Felix Roth
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyses public support for the euro in Germany. Drawing from the results of regular Eurobarometer surveys, it finds that the ongoing financial and sovereign debt crisis has reduced support for the euro among German citizens, but not dramatically so – at least not yet. In the 1990s, the German public was sceptical towards the euro. But since the introduction of euro banknotes and coins, a clear majority of citizens supports the euro – despite the financial and sovereign debt crisis. Moreover, on average, support for the euro is at a similar level in Germany as it is elsewhere in the euro area.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

4. Fiscal Policy Spillovers in the Euro Area: Where Are They?

Author:
Daniel Gros and Alexandr Hobza
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
What impact would a fiscal expansion in Germany have on the rest of the euro area? It has been generally suggested that it could go in either of two opposite directions, depending on the relative strength of two effects: the direct trade linkage and the financial market repercussions. A review of the results from four major macroeconomic models shows that the cross-country spillover effects of fiscal policy are indeed of uncertain sign and magnitude. Different models give quite different results if used in standardised simulations in terms of the sign, magnitude and time profile of the impact of a fiscal expansion in one member country (e.g. Germany) on other euro area countries. Fewer results are available concerning the potential spillover effects of structural policies, but they are similar to the ones concerning a budgetary stimulus: the magnitude of the spillover is small and varies across countries and over time.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe and Germany

5. EMU and Labour Markets: Vae Germania?

Author:
Daniel Gros
Publication Date:
02-1999
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The outcome of the first round of wage negotiations in post-EMU Germany sheds some new light on the old question: What impact will the euro have on labour markets and unemployment? Economists would say that it depends on the structure of the bargaining process. In wage-setting, it seems that either one of the two extremes of full centralisation or complete fragmentation is conducive to low inflation and unemployment.
Topic:
Economics and Political Economy
Political Geography:
Europe and Germany