Retained earnings, foreign portfolio ownership, and the German current account: A firm-level approach

Stefan Goldbach, Philipp Harms, Axel Jochem, Volker Nitsch and Alfons Weichenrieder

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: In some countries, a sizable fraction of savings is derived from corporate savings. Although larger, traded corporations are often co-owned by foreign portfolio investors, current international accounting standards allocate all corporate savings to the host country. This paper suggests a framework to correct for this misleading attribution and applies this concept to Germany. For the years 2012 to 2020, our corrections retrospectively reduce German savings and consequently the German current account surplus by, on average, €11.5bn annually. This amounts to lowering Germany’s average official current account surplus (€226.6bn) across these years by approximately five percent.

Date: 2024-06-10
New Economics Papers: this item is included in nep-acc and nep-eur
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Published in Darmstadt Discussion Papers in Economics 246 (2024-06-10)

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https://tuprints.ulb.tu-darmstadt.de/27468

Related works:
Journal Article: Retained Earnings, Foreign Portfolio Ownership, and the German Current Account: A Firm-Level Approach (2024)
Working Paper: Retained earnings, foreign portfolio ownership, and the German current account: A firm-level approach (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:145780

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