Frank Mattern, Jan Mischke, 21 June 2017

Germany’s large trade surplus is once again at the centre of controversy. This column argues that instead of being on the defensive about its competitive exports, Germany should look to reduce its current account surplus by making itself more competitive in the long term through smart investment in digital and other infrastructure.

Woo Jin Choi, Alan Taylor, 22 May 2017

Widening global imbalances, driven by reserve accumulation, can help us investigate how real exchange rates are determined. Standard theory would predict real exchange rate appreciation when there is an increase in net foreign assets. This column uses recent data from 75 countries to argue that, in practice, there is the opposite correlation in the particular case of reserve accumulation, notably in countries with higher capital controls and in developing countries.

Francesco Daveri, 28 May 2014

Eurosceptic parties have been popular in the recent European elections, many complaining that the euro has only served Germany's interests. This column points out that although data on aggregate trade flows show that Germany's trade surplus with the rest of the Eurozone is not excessive, the success of a Eurosceptic party is larger in countries where the bilateral trade deficit with Germany has increased in recent years. A gradual rebalancing of Germany's external accounts of Germany would bring with it not only a greater economic stability in the Eurozone but also greater political stability.

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