Global imbalances: Is Germany the new China? A skeptical view

Rajeswari Sengupta and Joshua Aizenman

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we evaluate the current account patterns of China and Germany. We point out that China's current account surplus as a share of global GDP in recent years resembles that of Germany’s. Yet, an important difference is that the Euro block’s current account inclusive of Germany, has overall been balanced, whereas emerging Asia's current account inclusive of China, has mostly been characterized by sizable surpluses. We further find that both China and Germany's current account surpluses seem to be accounted for by common factors. However we have reasons to doubt the long run viability of these current account trends in future decades. Demographic transitions in China and Germany are projected to reduce their surpluses, and this effect is stronger for Germany. We also discuss plausible reasons to doubt the extent to which the Euro block will move towards significant surplus in the coming years.

Keywords: current accounts; demographic transitions; global imbalances (search for similar items in EconPapers)
JEL-codes: F15 F32 (search for similar items in EconPapers)
Date: 2010-09-23
New Economics Papers: this item is included in nep-opm and nep-sea
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Global Imbalances: Is Germany the New China? A Skeptical View (2011)
Working Paper: Global Imbalances: Is Germany the new China? A Skeptical View (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:25578

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