The Euro Exchange Rate and Germany's Trade Surplus

23 Pages Posted: 18 Mar 2019

See all articles by Stefan Hohberger

Stefan Hohberger

European Union - JRC-Ispra, European Commision; University of Bayreuth - Faculty of Law, Business and Economics; University of Bayreuth

Marco Ratto

European Commission - Joint Research Center

Lukas Vogel

European Union - European Commission

Date Written: 2019

Abstract

We estimate a three-region (DE-REA-RoW) structural macroeconomic model, and we provide a counterfactual on how nominal exchange rate flexibility would have affected the German trade balance (TB) by simulating the shocks of the estimated model under a counterfactual flexible exchange rate regime. The actual and counterfactual TB trajectories are similar overall. Results suggest an around 2 pp lower trade surplus during 2012-15 together with a stronger real effective exchange rate in the counterfactual. The latter shows a similar upward trend in the TB, however, and the 2012-15 gap between actual and counterfactual closes at the end of the sample.

Keywords: Germany, euro, exchange rate, trade balance

JEL Classification: E440, E520, E530, F410

Suggested Citation

Hohberger, Stefan and Ratto, Marco and Vogel, Lukas, The Euro Exchange Rate and Germany's Trade Surplus (2019). CESifo Working Paper No. 7543, Available at SSRN: https://ssrn.com/abstract=3352907 or http://dx.doi.org/10.2139/ssrn.3352907

Stefan Hohberger (Contact Author)

European Union - JRC-Ispra, European Commision ( email )

Via Enrico Fermi 2749, Ispra, VA
Ispra (VA), 21027
Italy

University of Bayreuth - Faculty of Law, Business and Economics ( email )

Universit├Ątsstra├če 30
Bayreuth, 95447
Germany

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

Marco Ratto

European Commission - Joint Research Center ( email )

Via E. Fermi 2749
Brussels, B-1049
Belgium

Lukas Vogel

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

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