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German Economic Models, Transnationalization and European Imbalances

Hans-Michael Trautwein and Finn Körner

No 28 / 2014, ZenTra Working Papers in Transnational Studies from ZenTra - Center for Transnational Studies

Abstract: Germany’s net exports and macroeconomic policy stance are controversial issues in current debates about the Eurozone debt crisis. This paper shows that both are characteristics of what has been described in a variety of political economy literatures as the German socio-economic model. We argue that the model has evolved in three stages, from the economic miracle of the post-war era through the era of “Germany Inc.” and Bundesbank hegemony to the present transnationalization of German industries and finance. The three stages of the German model – or Models D, mark I - III – correspond closely to the exchange rate regimes of Bretton Woods, the European Monetary System and European Monetary Union (EMU). We describe them in three analogous settings that specify their different working conditions under the respective exchange-rate regime, following a chronology of success, dynamic instability and transformation. We point out that, while the German economy has under-gone substantial changes, there are two different mindsets of model thinking in Germany that have been remarkably persistent in public debate. We refer to these two mindsets as ordoliberalism and neo-mercantilism. Ordoliberalism is the normative mindset of policy speakers and academic econo-mists, whereas neo-mercantilism is the practical mindset of policymakers and business leaders. We discuss the differences and complementary uses of these modes of German model thinking and draw attention to their flaws and inadequacies at the present stage of European integration and transnationalization of the German economy.

Keywords: macroeconomic policy regimes; export-led growth; global imbalances; ordoliberalism; neo-mercantilism (search for similar items in EconPapers)
JEL-codes: E61 F43 F62 N14 O43 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-01, Revised 2014-01
New Economics Papers: this item is included in nep-eec, nep-int and nep-mac
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2378178 First version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zen:wpaper:28

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