IDEAS home Printed from https://ideas.repec.org/p/imk/report/125e-2017.html
   My bibliography  Save this paper

The Role of nominal wages in trade and current account surpluses

Author

Listed:
  • Gustav A. Horn
  • Fabian Lindner
  • Sabine Stephan

Abstract

A macroeconomically oriented wage policy in Germany in the years 2001 to 2015 would have led to a reduced growth of real net exports but would not have significantly reduced Germany's trade and current account surpluses. While real exports would have declined, higher export prices would have led to an increase in overall export receipts so that the current account surplus - denominated in euro terms - would scarcely have shrunk. Such a wage policy, however, would have increased domestic demand and would have influenced income distribution positively (an increase in the wage share). Such a policy would however, have improved the government's financial situation, thereby increasing its spending capacity. A combination of macroeconomic wage policy and a support by fiscal policy making use of the financial leeway created by higher wages would have decreased the nominal trade and current account balance to a greater degree than wage policy alone. Surpluses would mainly have been reduced through an increase in imports due to an improved domestic economic development. However, for the current account balance to be in line with EU rules, much stronger financial impulses would be needed.

Suggested Citation

  • Gustav A. Horn & Fabian Lindner & Sabine Stephan, 2017. "The Role of nominal wages in trade and current account surpluses," IMK Report 125e-2017, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  • Handle: RePEc:imk:report:125e-2017
    as

    Download full text from publisher

    File URL: http://www.boeckler.de/pdf/p_imk_report_125e_2017.pdf
    Download Restriction: no

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Do higher wages lead to more imports?
      by Bruno Duarte in EUnomics on 2018-09-24 22:12:17

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nora Albu & Heike Joebges & Rudolf Zwiener, 2018. "Increasing competitiveness at any price?," IMK Working Paper 192-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Jan Priewe, 2018. "A time bomb for the Euro? Understanding Germany's current account surplus," IMK Studies 59-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Sergio Cesaratto & Gennaro Zezza, 2018. "What went wrong with Italy, and what the country should now fight for in Europe," FMM Working Paper 37-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imk:report:125e-2017. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Nemitz). General contact details of provider: http://edirc.repec.org/data/imkhbde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.