Essays on Germany's Current Account

This thesis critically engages with recent debates surrounding Germany’s current account surplus. The aim of the thesis is to offer new insights into the economic drivers behind the surplus, the domestic political economic constellation sustaining the surplus and its international consequences. Chapter 1 examines the role of capital outflows as drivers of Germany’s current account surplus. It first clarifies the relationship between capital flows and the current account before proposing an asset price and an exchange rate channel through which gross capital outflows can affect the current account. It then assesses the empirical relevance of these channels for Germany using structural vector autoregressions. The results of the analysis show that gross capital outflows only play a negligible role in determining Germany’s current account. The second chapter of this thesis scrutinises the public discourse surrounding Germany’s current account. To do so, it uses both qualitative and quantitative text analysis methods to study a corpus of articles drawn from seven national newspapers. The main result of the analysis is that the current account represents a contested discursive subject across the wider media spectrum. Chapter 3, finally, assesses whether Germany’s current account surpluses are causing unemployment in destination countries. Using France as a case study, it shows that import competition from Germany did not cause the differential decline in manufacturing employment across French regions. The chapter argues that this result implies that the overall decline in French manufacturing employment cannot be due to German import competition either. The analysis is based on an exposure research design which is combined with an instrumental variable strategy for identification.