Simon Wren-Lewis, Professor of Economic Policy at the Blavatnik School of Government, Oxford University, and a fellow of Merton College, has written a new contribution on German exports and the Eurozone, referring also to my critique concerning the article by Servaas Storm. My only objection: Is it not about Germany simply has to import more rather than to “export a bit less”? At least politically this question is important, since most German politicians counter-argue exactly that way that an end to German wage moderation would mean to export less (and, in their point of view, that would bring about an increase in unemployment) which is in my point of view not necessarily the case. In my point of view, concerning unemployment, an end to wage moderation in Germany would be a pre-condition to stronger growth and therefore to bring back full employment. According to the most recent official figures the share of wages in gross domestic product (GDP) is 41.6 per cent in Germany; the share of export surplus (exports of goods and services minus imports of goods and services) is 7.8 per cent in GDP (2015). The appropriate development of wages is therefore decisive for growth and employment as well as for a balanced trade and current account balance (see also here on cost neutral and cost and inflation neutral wage development).
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