Robert Kollmann's picture
Université Libre de Bruxelles
Professor of Economics
Research Fellow, CEPR
PhD, University of Chicago

Voting history

German current account surpluses


Question 1: Do you agree that German current account surpluses are a threat to the Eurozone economy?


Strongly disagree
Confidence level:
Very confident
The German current account surpluses do not represent a threat to the Eurozone economy, because Germany trades more with the Rest of the World (ROW) than with the Rest of the Eurozone (the share of the ROW in German trade is rising steadily). The rise in the German current account surplus mainly drives up the current account surplus of the Eurozone as a whole. If anything, the German current account surplus is a symptom of weak demand in the rest of the Eurozone--the German current account surplus does not cause Eurozone problems! The key challenge for the Eurozone is solving the deep structural problems in France, Italy and periphery countries, and the weakness of Eurozone banks (Kollmann et al., 2016) Kollmann et al. (2015) present a thorough empirical analysis of the German current account, based on an estimated detailed dynamic macro model of Germany, the Rest of the Euro Area, and the Rest of the World. That study finds that the German CA surplus reflects a range of factors, such as the unfavourable demographic outlook for Germany, strong demand for German products by emerging economies, and German labor market reforms that have made Germany more competitive. The key shocks that drive the German current account have a surprisingly weak effect on real activity and inflation in the rest or the Euro Area. Depressed real activity in the Rest of the Euro Area mainly reflects home-grown problems. References: Robert Kollmann, Beatrice Pataracchia, Rafal Raciborski, Marco Ratto, Werner Roeger and Lukas Vogel, 2016. "The Post-Crisis Slump in the Euro Area and the US: Evidence from an Estimated Three-Region DSGE Model", European Economic Review, 2016, Vol. 88, pp. 21-41. Robert Kollmann, Marco Ratto, Werner Roeger, Jan in’t Veld and Lukas Vogel, 2015. "What Drives the German Current Account? And How Does it Affect Other EU Member States?", Economic Policy, 2015, Vol. 30, pp.47-93.