1. The German Undervaluation Regime under Bretton Woods How Germany Became the Nightmare of the World Economy
- Author:
- Martin Höpner
- Publication Date:
- 02-2019
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- Germany is an undervaluation regime, a regime that steers economic behavior towards deterioration of the real exchange rate and thereby towards export surpluses. This regime has brought the eurozone to the brink of collapse. But it is much older than the euro. It was established during the Bretton Woods years and has survived all subsequent European currency orders. The regime operates in two steps: competitive disinflation against trading partners; and resistance against correcting revaluations. The Bretton Woods order provid- ed perfect conditions for the establishment and perpetuation of the regime: it was flexible enough for sufficient macroeconomic policy autonomy to bring about differential inflation rates, and sticky enough to delay and minimize revaluations.
- Topic:
- Political Economy, Regional Cooperation, Capitalism, and Inflation
- Political Geography:
- Europe, Germany, and Central Europe