Why Do Some Societies Support Imbalances? Individual Attitudes, Public Discourse and the Current Account in Australia and Germany
25 Pages Posted: 1 Mar 2017 Last revised: 3 Mar 2017
Date Written: February 27, 2017
Although current accounts are at the core of many contemporary international political conflicts, research fails to account for the reasons of long-term current account deficits and surpluses. This paper examines the socio-political sources of these persistent external imbalances. It suggests that diverging current accounts are deeply rooted in the societies of the respective countries. Surplus countries exhibit a fundamentally different societal consensus about the implications and desirability of current account deficits and surpluses than deficit countries. This consensus, in turn, manifests itself in citizens’ consumption preferences and the related public discourse over the current account and its major components. Our mixed-methods analysis of Australia, a notorious deficit country, and Germany, a notorious surplus country, confirms that Australians are significantly more inclined to consume under similar economic conditions than Germans. The two countries also differ on how the current account is debated in the media. In Germany, a high savings rate and a current account surplus are seen as signs of virtue and economic competitiveness. In Australia, a current account deficit is seen as a proof of the country’s attractiveness for investors.
Keywords: exports; competitiveness; saving; consumption; mercantilism; imbalances
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