Determinants of German and Japanese Exports: A Comparative Study

This study investigates the determinants of German and Japanese exports in a comparative fashion. By estimating an autoregressive distributed lag model for each country, we find that the income elasticity of Japanese exports is three times as large as that of Germany’s exports. This relative insensitivity to external demand explains why Germany has maintained its export growth whereas Japanese exports started to stagnate after the global financial crisis. Because Germany adopted the euro in 1999, it was able to maintain large trade surpluses. If Germany had instead kept the Deutsche Mark (DM), the DM would have appreciated owing to the Central Bank of Germany’s consistent preference for a tight monetary policy, and Germany’s trade surpluses would have dissipated. A sharp increase in Japanese foreign direct investment after 2011 has also played a role in reducing Japanese exports after the global financial crisis.

Schröder Asserts the German National Interest, 1999–2003

This chapter discusses how Gerhard Schröder, leader of Germany's Social Democratic Party, proposed to delay the euro's birth rather than start with members who had not achieved the required fiscal discipline. Campaigning to replace Helmut Kohl as chancellor in March 1998, Schröder observed that some countries would struggle to survive the rigors of the monetary union. However, once Schröder was elected chancellor in October, his hands were tied. In April 1998, the Bundestag had already authorized Germany's shift from the deutsche mark to the euro, Germany had made commitments to its European partners, and preparation for launch of the euro was in full swing. Ultimately, the euro was born uneventfully on January 1, 1999. Schröder continued the narrative of Europe's eventual political awakening; he even called for greater European “political union.” To the contrary, Schröder quickly developed a confrontational relationship with European institutions.

Postacie alegoryczne umieszczone w szacie graficznej banknotów stumarkowych emitowanych przez banki Badenii, Bawarii, Saksonii i Wirtembergii przed I wojną światową

After the unification of Germany in 1871, one of the unifying factors was the introduction of the single currency. The issuing bank was Reichsbank, which was based on a Prussian bank. From 1875, it issued coins and banknotes. Except for the central bank, however, the limited right to issue their own money was left to several provincial banks whose numbers were constantly decreasing. In the early twentieth century there were only four central banks of federal states. The banks of Baden, Bavaria, Saxony and Württemberg issued their own paper money until 1935 when they were deprived of their right to do so. Each of these institutions issued 100 Deutsche Mark banknotes whose graphic design differed from the appearance of Reichsbank’s paper money. Banknotes printed for these banks had a rich graphic design. It was not limited to simple ornamentation and symbols, but contained rich decoration in the form of allegorical figures ‘armed’ with the symbols of trade, crafts, agriculture and industry. Some of these characters and their attributes can be identified with specific Greek and Roman gods such as Hermes or Tyche. Among the figures appearing in the graphic design of the banknotes were women with wreaths of oak leaves on their heads, which may be interpreted as personifications of the states. Two busts have been identified as the symbolic rivers of Rhine and Neckar. The presence of allegorical characters is part of the global tendency during the nineteenth and twentieth centuries. At that time, images of deities and symbolic figures referring to the economy were commonly placed on banknotes in European countries and their overseas colonies.

Les taux de change bilatéraux adoptés pour l’entrée dans l’euro sont-ils des taux d’équilibre?

RÉSUMÉ Au mois de mai 1998, les autorités européennes ont décidé de fixer de manière irrévocable les parités bilatérales pour les monnaies des 11 pays qui ont adopté l’euro. En étudiant les taux de change bilatéraux des différents pays européens face au deutsche mark, on montre que dans la plupart des cas, ces parités sont très proches de taux de parité des pouvoirs d’achat (PPA) définis à l’aide de niveaux généraux de prix (prix à la consommation ou prix du Produit Intérieur Brut). À l’inverse, ces parités ne sont pas compatibles avec ce que donnerait l’utilisation d’une parité des coûts unitaires du travail. Ainsi, on observe que l’entrée dans l’euro s’est faite à des niveaux de taux de change qui valident des écarts de coûts pouvant atteindre 40 %. Or, une analyse en termes de causalité montre que ce sont les distorsions de coûts plus que celles de prix qui sont significatives pour expliquer des déséquilibres internes et/ou externes. Ces conclusions conduisent à douter de la pertinence d’une référence à une PPA des niveaux généraux de prix et invitent à tenir compte davantage des coûts unitaires du travail pour la fixation des parités d’équilibre.

“Number One in Europe”: The Startling Emergence of the Deutsche Mark, 1968–1969

The dollars—and pounds, and francs—came pouring in. Speculators and small savers across Western Europe raced to exchange their currencies for the Deutsche Mark. “Hot money” flowed into Germany at astounding rates. The reserves of West Germany's central bank, the Bundesbank, shot up by DM 9.4 billion ($2.15 billion) in the first three weeks of November 1968—with DM 7.3 billion arriving in just three days of trading. Airports in Germany barred exchanges of more than one hundred francs at a time; train stations in Zurich stopped accepting French notes altogether.