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Das deutsche Rätsel

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  • Sinn, Hans-Werner

Abstract

The article advances the hypothesis that Germany is unable to increase its gains from trade despite increasing trading volumes. High and rigid German wages argely result from the minimum wage constraint imposed by a welfare state that offers generous replacement incomes. Confronted by low-wage competition from post-communist countries, Germany overspecializes in capital intensive goods, which creates a pathological export boom in terms of added value produced in exports. In addition, the country overspecializes in downstream activities, which implies that export quantities grow faster than value added. The reasons which induce extremely high exports are the same as those which cause unemployment to rise and the economy to stagnate.

Suggested Citation

  • Sinn, Hans-Werner, 2006. "Das deutsche Rätsel," Munich Reprints in Economics 950, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:950
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    File URL: https://epub.ub.uni-muenchen.de/950/1/sinn-das-deutsche-raetsel.pdf
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    References listed on IDEAS

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    1. Arbeitsgemeinschaft deutscher wirtschaftswissenschaftlicher Forschungsinstitute, 2004. "The State of the World Economy and the German Economy in Spring 2004," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(08), pages 03-46, April.
    2. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2002. "Active Welfare - A path to higher employment and growth," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(09), pages 03-52, May.
    3. Arbeitsgemeinschaft deutscher wirtschaftswissenschaftlicher Forschungsinstitute, 2004. "Frühjahrsgutachten: Die Lage der Weltwirtschaft und der deutschen Wirtschaft im Frühjahr 2004," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 10(6), pages 139-195.
    4. Arbeitsgemeinschaft deutscher wirtschaftswissenschaftlicher Forschungsinstitute, 2004. "Die Lage der Weltwirtschaft und der deutschen Wirtschaft im Herbst 2004," HWWA Reports 248, Hamburg Institute of International Economics (HWWA).
    5. Davis, Donald R, 1998. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade," American Economic Review, American Economic Association, vol. 88(3), pages 478-494, June.
    6. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(1), pages 98-116.
    7. Unknown, 2004. "Die Lage der Weltwirtschaft und der deutschen Wirtschaft im Fruhjahr 2004," Report Series 26111, Hamburg Institute of International Economics.
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    Cited by:

    1. Bernhard Herz & Marco Wagner, 2008. "Exportweltmeister Deutschland – ein Sommermärchen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(4), pages 446-464, November.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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