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Berlin views the current account surplus simply as a reflection of Germany’s superior competitiveness. This is an economically illiterate view

If Germany had its own currency and a floating exchange rate, the current account imbalance would have mostly disappeared.

In theory, there is a simple solution. Berlin could cut taxes and raise investment spending. 

There is a lot of headroom. After years of austerity, the fiscal multiplier — the impact of each euro of deficit spending — is large.

Unfortunately, Germany’s balanced budget rule makes this impossible.

Wolfgang Münchau, FT 8 May 2016

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