Germany’s persistent balance-of-payments disequilibrium revisited

Abstract

The work examines Germany’s balance-of-payments surplus. The author first briefly considers the United States balance of payments. The German balance of payments is then analysed according to structural aspects, absorption, the level of domestic investment, and policy. A digression on stock-adjustment and flow models of international capital movements is also provided. The author concludes that absorption dominates the current-account balance, and that what is needed is well-functioning capital markets to fund the savings or borrowings which spill abroad, plus international coordination of monetary policy.

JEL: F31, F32