Francesco Giavazzi, 21 April 2010

Should Germany keep running a trade surplus? This column argues that any decision should be based on Germany’s interests alone. But new data suggests that its investments in southern Europe may be at risk of being wasted because the euro has removed the need for these countries to pay risk premiums. Germany might therefore consider cutting its surplus and boosting domestic consumption.

Daniel Leigh, Marco Terrones, Abdul Abiad, 17 April 2010

As the debate over whether China should reduce its current-account surplus continues, this column examines 28 such surplus reversals in advanced and emerging market economies over the past 50 years. Surplus reversals were not associated with lower growth in output or employment. Moreover, there are better balances between external and domestic demand and between growth in the tradables and non-tradables sectors.

Yiping Huang, 16 April 2010

The debate over the cause of China’s current-account surplus continues to develop. This column suggests a number of factors are probably to blame and one less-considered cause is input-cost distortion caused by China’s asymmetric economic liberalisation. Any debate on policy response must therefore move beyond simply discussing currency appreciation.

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