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 MPIfG Discussion Paper 18/1

Fritz W. Scharpf


International Monetary Regimes and the German Model


 

 

Abstract


 
The end of the Bretton Woods regime and the fall of the Iron Curtain deepened the export orientation of the German model of the economy. Only after entry into the Monetary Union, however, did rising exports turn into a persistent export–import gap that became a problem for other eurozone economies. This Discussion Paper shows why the present asymmetric euro regime will not be able to enforce their structural transformation on the German model. Neither will German governments be able to respond to demands that would bring the performance of the German economy closer to eurozone averages. Instead, it is more likely that present initiatives for financial and fiscal risk sharing will transform the Monetary Union into a transfer union.
 

 

Zusammenfassung


 
Das Ende des Bretton-Woods-Regimes und der Fall des Eisernen Vorhangs vertieften die Export-Orientierung der deutschen Wirtschaft. Aber erst unter der Währungsunion führten deutsche Exporte zu einer dauerhaften Export-Import-Lücke und erzeugten damit ein Problem für die anderen Mitgliedsländer. Das asymmetrische Euro-Regime kann deren strukturelle Transformation nach deutschem Vorbild nicht erzwingen. Ebenso wenig könnte die deutsche Politik eine strukturelle Transformation des deutschen Modells erreichen. Wahrscheinlicher ist es, dass die gegenwärtigen Initiativen zur finanziellen und fiskalischen Risikoteilung die Währungsunion zur Transferunion verändern werden.
 

 

Contents


 
1  Introduction: From sick man to employment champion and eurozone hegemon
 
2  1949–1969: West Germany under the Bretton Woods regime
        The original model: Wage moderation and monetary constraints
        Benefiting from the asymmetry of the Bretton Woods regime
        Conclusion
 
3  1969–1989: Struggling with volatile exchange rates
        Monetarist coordination and the economic costs of hard-currency policies
        Floating and exchange rate coordination
        Diversified quality production
        How the welfare state is constraining the rise of the service economy
        The German model at the end of the 1980s
 
4  The German model in the 1990s: Unification and the rise of global capitalism
        The costs of unification
        The fall of the Iron Curtain: A major boost for German export industries
        Industrial relations under stress
        Wage restraint: An effect of union power or union weakness?
        The German model at the end of the 1990s
 
5  The German model: Challenged and then rewarded by monetary union
        Germany’s euro crisis and welfare-state reforms, 1999–2008
        Structural reforms of Agenda 2010
        The turnaround of employment performance
        The German model in the eurozone
 
6  EMU divergence ignored and convergence enforced
        From the euro crisis to an asymmetric euro regime
        The economic logic of enforced asymmetric convergence
 
7  Elusive convergence
        Adjustment, but not convergence
        The German model – too deviant to be imitated
        Symmetric rules for Germany?
 
8  The German model at an impasse
        Economic persistence and political immobilism
        European options
        On the slope to a transfer union?
 
Figures
 
References
 

 

 
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