TheGerman Model and theEuropean Crisis

In: Journal of common market studies: JCMS, Band 51, Heft 6, S. 1023-1039

Abstract

AbstractThe large current account imbalances in the eurozone reflect persistent diverging trends between core and periphery countries, also fed by low interest rates and abundant capital flows brought about by the introduction of the euro. With the global financial crisis, the market sentiment has changed, and capital has left the periphery countries suffering from debt and growth problems due to their failure to bring price–wage dynamics into uniformity with those of the more disciplined countries.Germany is called upon to provide financial assistance and additional external demand; however, though the euro is at stake,Germans are recalcitrant. This article investigates the rationale of theGerman stance in light of the (corporatist‐etatist, neo‐mercantilist)German socio‐economic model and the widespread concern about losing the competitiveness thatGermany regained through painful reforms and changes in the last two decades.