The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle
AbstractGermany is the laggard of Europe, yet the country is world champion in merchandise exports. The paper tries to solve this theoretical and empirical puzzle by diagnosing a 'pathological export boom' and a 'bazaar effect'. Excessively high wages defended by unions and the welfare state against the forces of international low-wage competition destroy too big a fraction of the labour-intensive sectors and drive too much capital and labour into the capital-intensive export sectors, causing both unemployment and excessive value added in exports. Moreover, excessive wages induce too much outsourcing of upstream production activities, which implies that export quantities grow too much in relation to value added contained in exports. Finally, excessive wages cause capital flight resulting in a too large current account surplus. Copyright 2006 The Author Journal compilation 2006 Blackwell Publishing Ltd .
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal World Economy.
Volume (Year): 29 (2006)
Issue (Month): 9 (09)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920
Other versions of this item:
- Sinn, Hans-Werner, 2006. "The pathological export boom and the bazaar effect: How to solve the German puzzle," Munich Reprints in Economics 19602, University of Munich, Department of Economics.
- Hans-Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect - How to Solve the German Puzzle," CESifo Working Paper Series 1708, CESifo Group Munich.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Egger & Michael Pfaffermayr, 2006. "Spatial convergence," Papers in Regional Science, Wiley Blackwell, vol. 85(2), pages 199-215, 06.
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- Hans-Werner Sinn & Wolfgang Ochel, 2003.
"Social Union, Convergence and Migration,"
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- Hans-Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," CESifo Working Paper Series 961, CESifo Group Munich.
- Sinn, Hans-Werner & Ochel, Wolfgang, 2003. "Social Union, Convergence and Migration," Munich Reprints in Economics 948, University of Munich, Department of Economics.
- Brecher, Richard A, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 98-116, February.
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