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Test of the German resilience


  • Bornhorst, Fabian
  • Mody, Ashoka


From its early post-war catch-up phase, Germany's formidable export engine has been its consistent driver of growth. But Germany has almost equally consistently run current account surpluses. Exports have powered the dynamic phases and helped emerge from stagnation. Volatile external demand, in turn, has elevated German GDP growth volatility by advanced countries' standards, keeping domestic consumption growth at surprisingly low levels. As a consequence, despite the size of its economy and important labor market reforms, Germany's ability to act as global locomotive has been limited. With increasing competition in its traditional areas of manufacturing, a more domestically-driven growth dynamic, especially in the production and delivery of services, will be good for Germany and for the global economy. Absent such an effort, German growth will remain constrained, and Germany will play only a modest role in spurring growth elsewhere.

Suggested Citation

  • Bornhorst, Fabian & Mody, Ashoka, 2012. "Test of the German resilience," CFS Working Paper Series 2012/14, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:201214

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    References listed on IDEAS

    1. Barry Eichengreen, 2006. "Introduction to The European Economy since 1945: Coordinated Capitalism and Beyond," Introductory Chapters,in: The European Economy since 1945: Coordinated Capitalism and Beyond Princeton University Press.
    2. Hans-Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle," The World Economy, Wiley Blackwell, vol. 29(9), pages 1157-1175, September.
    3. Alina Carare & Ashoka Mody, 2012. "Spillovers of Domestic Shocks: Will They Counteract the ‘Great Moderation’?," International Finance, Wiley Blackwell, vol. 15(1), pages 69-97, April.
    4. Giersch,Herbert & Paqué,Karl-Heinz & Schmieding,Holger, 1994. "The Fading Miracle," Cambridge Books, Cambridge University Press, number 9780521358699, March.
    5. Tito Boeri & Herbert Bruecker, 2011. "Short‐time work benefits revisited: some lessons from the Great Recession," Economic Policy, CEPR;CES;MSH, vol. 26(68), pages 697-765, October.
    6. Helene Poirson Ward & Sebastian Weber, 2011. "Growth Spillover Dynamics From Crisis to Recovery," IMF Working Papers 11/218, International Monetary Fund.
    7. Ian Dew-Becker & Robert J. Gordon, 2012. "The Role of Labor-Market Changes in the Slowdown of European Productivity," Review of Economics and Institutions, Università di Perugia, vol. 3(2).
    8. Anna Ivanova, 2012. "Current Account Imbalances; Can Structural Policies Make a Difference?," IMF Working Papers 12/61, International Monetary Fund.
    9. Sebastian Weber & Anna Ivanova, 2011. "Do Fiscal Spillovers Matter?," IMF Working Papers 11/211, International Monetary Fund.
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    More about this item


    Economic Performance; Economic Reforms; Economic Recovery; Current Account; Productivity; Labor Market; Spillovers; Germany;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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