Germany's Persistent Balance-of-Payments Disequilibrium Revisited. German Studies Notes.

This essay compares Germany's persistent financial disequilibrium with the balance of payments situation in the United States. Delivered at a Symposium on German Economic Growth and Stability, the author concentrates on Germany's balance of payments surplus and presents U.S. figures mainly as a point of comparison. The material on Germany has been subdivided into four topics: (1) "structural aspects," which is said to include strong post war capital goods demands, high export rates and industry efficiency, all of which are associated with a high propensity for average and marginal savings; (2) "absorption," which is defined as the difference between output and spending; (3) "the level of domestic investment," which the author maintains is lower in Germany than in foreign markets due to a sluggish German response to interest rate changes; and (4) "policy," which the author points out is consistently set in the direction of resisting inflation, regardless of other variables. The conclusion is that well-functioning capital markets and international coordination are necessary to counteract the absorption which presently dominates the current-account balance. Comments on the paper by William P. Travis of Indiana University are presented as are tables, charts, and excerpts from economic literature. (Author/DB)