Arbeitsgruppe Makroökonomik, insbesondere Geldpolitik

Paper Published in the ECB Working Paper Series


What drives the highly persitent current account surplus in Germany? In a recent working paper that is now also available in the ECB Working paper Series we give an answer to this question.

The paper is the product of a third party fund cooperation with the ifo-institute Munich, in particular with the ifo Center for Macroeconomics and Surveys. The paper previously awared by the Ministry of Finance with a best paper prize award is now also available in the ECB Working Paper Series No 2586.

LINK: the paper is available here.

We investigate, in the case of Germany, the positive correlation between the cyclical components of the corporate saving glut in the non-financial corporate sector and the current account surplus from a capital account perspective. Employing sign restrictions, our findings suggest that mostly labor supply, world demand and financial friction shocks account for the joint dynamics of excess corporate saving and the current account surplus. Household saving shocks, by contrast, cannot explain the correlation. We conclude that, explained through these factors, the corporate saving glut is an important driver of the cyclical component of the current account.