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 Research Projects at the MPIfG

Political Economy of Export-Led Growth

Lucio Baccaro and Martin Höpner


 
Advanced countries face a tendency towards stagnation caused by an excess of savings and a corresponding penury of investments. An export-led growth model solves the problem of insufficient effective demand by relying overwhelmingly on foreign demand while repressing domestic demand. Focusing on Germany, this project analyzes the pillars of export-led growth: a set of institutions and policies that keep inflation lower than in trade partners and a rigid exchange rate regime (the euro) that rules out exchange rate adjustment, thus ensuring real exchange rate undervaluation. It also discusses the vulnerability and inherent instability of such a model. Project duration: March 2019 to October 2021.
 

 
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