A Tale of Two Surplus Countries : China and Germany

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Author(s)

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Detail(s)

Original languageEnglish
Pages (from-to)131-158
Journal / PublicationOpen Economies Review
Volume31
Issue number1
Online published7 Jun 2019
Publication statusPublished - Feb 2020

Abstract

We analyze current account imbalances through the lens of the two largest surplus countries; China and Germany. We observe two striking patterns visible since the 2007/8 Global Financial Crisis. First, while China has been gradually reducing its current account surplus, Germany’s surplus has continued to increase throughout and after the crisis. Second, for these two countries, there is a remarkable reversal in the patterns of exchange rate misalignment: China’s currency has turned from being undervalued to overvalued, Germany’s currency has erased its level of overvaluation and become undervalued. Our empirical analyses show that the current account balances of these two countries are quite well explained by currency misalignment, common economic factors, and country-specific factors. Furthermore, we highlight the global financial crisis effects and, for Germany, the importance of differentiating balances against euro and non-euro countries.

Research Area(s)

  • Currency misalignment, Current account surplus, Global financial crisis, Global imbalances

Bibliographic Note

Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).

Citation Format(s)

A Tale of Two Surplus Countries : China and Germany. / Cheung, Yin-Wong; Steinkamp, Sven; Westermann, Frank.

In: Open Economies Review, Vol. 31, No. 1, 02.2020, p. 131-158.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal