The euro exchange rate and Germany's trade surplus

Stefan Hohberger, Marco Ratto and Lukas Vogel

No 7543, CESifo Working Paper Series from CESifo

Abstract: We estimate a three-region (DE-REA-RoW) structural macroeconomic model, and we provide a counterfactual on how nominal exchange rate flexibility would have affected the German trade balance (TB) by simulating the shocks of the estimated model under a counterfactual flexible exchange rate regime. The actual and counterfactual TB trajectories are similar overall. Results suggest an around 2 pp lower trade surplus during 2012-15 together with a stronger real effective exchange rate in the counterfactual. The latter shows a similar upward trend in the TB, however, and the 2012-15 gap between actual and counterfactual closes at the end of the sample.

Keywords: Germany; euro; exchange rate; trade balance (search for similar items in EconPapers)
JEL-codes: E44 E52 E53 F41 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eec, nep-mac, nep-mon and nep-opm
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Journal Article: The euro exchange rate and Germany's trade surplus (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7543

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