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Die deutsche Vereinigung und das Leistungsbilanzdefizit
Credit and Capital Markets – Kredit und Kapital, Vol. 31 (1998), Iss. 2 : pp. 190–216
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Axel Schimmelpfennig, Kiel
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Abstract
German Reunification and its Current Account Deficit
The German current account balance has moved from surplus to deficit in the course of unification. A theoretical model for the current account, encompassing the elasticities, the monetary, and the absorptions approach is set up and tested for Germany, using cointegration analysis. In addition, private savings are modelled by a life-cycle model nested in a model of overlapping generations. A country’s private and government savings are identified as the major factors driving the current account. Private savings are explained by the specified model. The concept of a primary deficit as well as the concept of half- and full-debt-cycles are used to argue that the German current account deficit can easily move from sustainability to unsustainability in the near future.