Yglesias » Evolution of Eurozone Trade Balance

Yglesias » Evolution of Eurozone Trade Balance:

The OECD has a new survey out of the Euro area economy, including some slides (slides) from Pier-Carlo Padoan:

Among other things, you see here another illustration of the point that there’s something very simplistic about the “Germany has high net exports because we make good cars” theory of global trade flows. BMW made good cars in the 1990s, too, but Germany ran modest trade deficits at that point. And if Germans (and Dutch, Austrian, Swedish, etc.) households started buying more consumer goods (or, equivalently, taking more vacations) the growth outlook for neighboring countries would be better. But this wouldn’t just be a favor to the people of Spain, Germans would actually have more stuff. The Schröder government undertook a lot of politically difficult reforms in order to boost German productive capacity. But presumably the point of this was to actually reap more rapid increases in living standards and not just to try to win some kind of global exports championship.