New Directions in Modern Economics series
Edited by Eckhard Hein, Daniel Detzer and Nina Dodig
Chapter 7: Financialisation and the crises in the export-led mercantilist German economy
This study on Germany examines the long-run changes between the financial and the non-financial sectors of the economy, and in particular the effects of these changes on the macroeconomic developments that have led or contributed to the financial crisis starting in 2007 and the Great Recession in 2008/09. The first part provides some descriptive statistics on real GDP growth, on the growth contributions of the main demand aggregates, and the financial balances of the macroeconomic sectors since the early 1980s, and it classifies the German type of development as ‘export-led mercantilist’. The second part examines the effects of an increasing dominance of finance since the early/mid-1990s on income distribution, investment in capital stock, consumption and the current account in more detail. The third part links the long-run developments with the financial and economic crisis and examines the causes of the quick recovery in Germany.
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