[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/ces/ifowps/_280.html
   My bibliography  Save this paper

The Corporate Saving Glut and the Current Account in Germany

Author

Listed:
  • Thorsten Klug
  • Eric Mayer
  • Tobias Schuler
Abstract
We investigate for Germany the positive correlation between the corporate savings glut in the non-financial corporate sector and the current account surplus from a capital account perspective. By employing sign restrictions our findings suggest that mostly labor market, world demand and financial friction shocks can account for the joint dynamics of excess corporate savings and the current account surplus. Private savings shocks, in contrast, cannot explain the correlation. We conclude that a corporate savings glut is a main driver of the current account surplus.

Suggested Citation

  • Thorsten Klug & Eric Mayer & Tobias Schuler, 2018. "The Corporate Saving Glut and the Current Account in Germany," ifo Working Paper Series 280, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_280
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/wp-2018-280-schuler-etal-corporate-saving-n_0.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert Kollmann & Marco Ratto & Werner Roeger & Jan in't Veld & Lukas Vogel, 2015. "What drives the German current account? And how does it affect other EU Member States?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 30(81), pages 47-93.
    2. Uhlig, Harald, 2005. "What are the effects of monetary policy on output? Results from an agnostic identification procedure," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 381-419, March.
    3. Dedola, Luca & Rivolta, Giulia & Stracca, Livio, 2017. "If the Fed sneezes, who catches a cold?," Journal of International Economics, Elsevier, vol. 108(S1), pages 23-41.
    4. Konrad Adler & Mr. JaeBin Ahn & Mai Dao, 2019. "Innovation and Corporate Cash Holdings in the Era of Globalization," IMF Working Papers 2019/017, International Monetary Fund.
    5. Enders, Zeno & Müller, Gernot J. & Scholl, Almuth, 2011. "How do fiscal and technology shocks affect real exchange rates?: New evidence for the United States," Journal of International Economics, Elsevier, vol. 83(1), pages 53-69, January.
    6. Stephan Danninger & Fred Joutz, 2008. "What Explains Germany's Rebounding Export Market Share?," CESifo Economic Studies, CESifo Group, vol. 54(4), pages 681-714, December.
    7. Faust, Jon, 1998. "The robustness of identified VAR conclusions about money," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 49(1), pages 207-244, December.
    8. Albonico, Alice & Calès, Ludovic & Cardani, Roberta & Croitorov, Olga & Ferroni, Filippo & Giovannini, Massimo & Hohberger, Stefan & Pataracchia, Beatrice & Pericoli, Filippo & Raciborski, Rafal & Rat, 2017. "The Global Multi-Country Model (GM): an Estimated DSGE Model for the Euro Area Countries," JRC Working Papers in Economics and Finance 2017-10, Joint Research Centre, European Commission.
    9. Fiorella De Fiore & Harald Uhlig, 2015. "Corporate Debt Structure and the Financial Crisis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1571-1598, December.
    10. Tan, Zhibo & Yao, Yang & Wei, Shang-Jin, 2015. "Financial structure, corporate savings and current account imbalances," Journal of International Money and Finance, Elsevier, vol. 54(C), pages 142-167.
    11. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    12. Eleonora Granziera & Hyungsik Roger Moon & Frank Schorfheide, 2018. "Inference for VARs identified with sign restrictions," Quantitative Economics, Econometric Society, vol. 9(3), pages 1087-1121, November.
    13. Urban Jermann & Vincenzo Quadrini, 2012. "Macroeconomic Effects of Financial Shocks," American Economic Review, American Economic Association, vol. 102(1), pages 238-271, February.
    14. Chen, Peter & Karabarbounis, Loukas & Neiman, Brent, 2017. "The global rise of corporate saving," Journal of Monetary Economics, Elsevier, vol. 89(C), pages 1-19.
    15. Frank Smets & Rafael Wouters, 2007. "Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach," American Economic Review, American Economic Association, vol. 97(3), pages 586-606, June.
    16. Jonas E. Arias & Juan Rubio-Ramirez & Daniel F. Waggoner, 2013. "Inference Based on SVARs Identied with Sign and Zero Restrictions: Theory and Applications," Working Papers 2013-24, FEDEA.
    17. Renée Fry & Adrian Pagan, 2011. "Sign Restrictions in Structural Vector Autoregressions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 938-960, December.
    18. Antonio Falato & Dalida Kadyrzhanova & Jae W. Sim, 2013. "Rising intangible capital, shrinking debt capacity, and the US corporate savings glut," Finance and Economics Discussion Series 2013-67, Board of Governors of the Federal Reserve System (U.S.).
    19. Juan F. Rubio-Ramírez & Daniel F. Waggoner & Tao Zha, 2010. "Structural Vector Autoregressions: Theory of Identification and Algorithms for Inference," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 665-696.
    20. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    21. Giacomini, Raffaella & Kitagawa, Toru, 2014. "Inference about Non-Identified SVARs," CEPR Discussion Papers 10287, C.E.P.R. Discussion Papers.
    22. Gert Peersman, 2005. "What caused the early millennium slowdown? Evidence based on vector autoregressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 185-207.
    23. Canova, Fabio & Paustian, Matthias, 2011. "Business cycle measurement with some theory," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 345-361.
    24. Cantore, Cristiano & Levine, Paul & Pearlman, Joseph & Yang, Bo, 2015. "CES technology and business cycle fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 61(C), pages 133-151.
    25. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005. "Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 1-45, February.
    26. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    27. Christiane Baumeister & James D. Hamilton, 2015. "Sign Restrictions, Structural Vector Autoregressions, and Useful Prior Information," Econometrica, Econometric Society, vol. 83(5), pages 1963-1999, September.
    28. Joseph W. Gruber & Steven B. Kamin, 2015. "The Corporate Saving Glut in the Aftermath of the Global Financial Crisis," International Finance Discussion Papers 1150, Board of Governors of the Federal Reserve System (U.S.).
    29. Gadatsch, Niklas & Hauzenberger, Klemens & Stähler, Nikolai, 2016. "Fiscal policy during the crisis: A look on Germany and the Euro area with GEAR," Economic Modelling, Elsevier, vol. 52(PB), pages 997-1016.
    30. Christoph Spengel & Christina Elschner & Michael Grünewald & Timo Reister, 2007. "Einfluss der Unternehmensteuerreform 2008 auf die effektive Steuerbelastung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(2), pages 86-97.
    31. Henriette Neumann, 2020. "The determinants of German exports – an analysis of intra- and extra-EMU trade," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 126-145, January.
    32. Fratzscher, Marcel & Juvenal, Luciana & Sarno, Lucio, 2010. "Asset prices, exchange rates and the current account," European Economic Review, Elsevier, vol. 54(5), pages 643-658, July.
    33. Gert Peersman & Roland Straub, 2009. "Technology Shocks And Robust Sign Restrictions In A Euro Area Svar," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 727-750, August.
    34. Marsh, Terry A & Merton, Robert C, 1987. "Dividend Behavior for the Aggregate Stock Market," The Journal of Business, University of Chicago Press, vol. 60(1), pages 1-40, January.
    35. Christophe André & Stéphanie Guichard & Mike Kennedy & Dave Turner, 2007. "Corporate Net Lending: A Review of Recent Trends," OECD Economics Department Working Papers 583, OECD Publishing.
    36. Servaas Storm & C.W.M. Naastepad, 2015. "Crisis and Recovery in the German Economy: The Real Lessons," Working Papers Series 10, Institute for New Economic Thinking.
    37. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    38. Uhlig, Harald, 1994. "What Macroeconomists Should Know about Unit Roots: A Bayesian Perspective," Econometric Theory, Cambridge University Press, vol. 10(3-4), pages 645-671, August.
    39. Luisa Corrado & Tobias Schuler, 2018. "Financial Cycles, Credit Bubbles and Stabilization Policies," CESifo Working Paper Series 7422, CESifo.
    40. Filipa Sá & Tomasz Wieladek, 2015. "Capital Inflows and the U.S. Housing Boom," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S1), pages 221-256, March.
    41. Urban Jermann & Vincenzo Quadrini, 2012. "Erratum: Macroeconomic Effects of Financial Shocks," American Economic Review, American Economic Association, vol. 102(2), pages 1186-1186, April.
    42. Maas, Daniel & Mayer, Eric & Rüth, Sebastian K., 2018. "Current account dynamics and the housing cycle in Spain," Journal of International Money and Finance, Elsevier, vol. 87(C), pages 22-43.
    43. Canova, Fabio & Nicolo, Gianni De, 2002. "Monetary disturbances matter for business fluctuations in the G-7," Journal of Monetary Economics, Elsevier, vol. 49(6), pages 1131-1159, September.
    44. Bennet Berger & Guntram B. Wolff, 2017. "The global decline in the labour income share- is capital the answer to Germany’s current account surplus?," Policy Contributions 20285, Bruegel.
    45. Jonas E. Arias & Juan F. Rubio‐Ramírez & Daniel F. Waggoner, 2018. "Inference Based on Structural Vector Autoregressions Identified With Sign and Zero Restrictions: Theory and Applications," Econometrica, Econometric Society, vol. 86(2), pages 685-720, March.
    46. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
    47. Nikolay Hristov, 2016. "The Ifo DSGE Model for the German Economy," ifo Working Paper Series 210, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    48. Storm, Servaas & Naastepad, C.W.M., 2015. "Crisis and recovery in the German economy: The real lessons," Structural Change and Economic Dynamics, Elsevier, vol. 32(C), pages 11-24.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lucia Granelli & Martin Habet & Guergana Stanoeva & Gaetano D’Adamo & Robert Gampfer, 2020. "Puzzles in Non-Financial Corporate Sector Savings across the G20," European Economy - Economic Briefs 063, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Ruppert, Kilian & Stähler, Nikolai, 2020. "Household savings, capital investments and public policies: What drives the German current account?," Discussion Papers 41/2020, Deutsche Bundesbank.
    3. Schuler, Tobias & Sun, Yiqiao, 2022. "The current account and monetary policy in the euro area," Working Paper Series 2696, European Central Bank.
    4. Ruppert, Kilian & Stähler, Nikolai, 2022. "What drives the German current account? Household savings, capital investments and public policies," Economic Modelling, Elsevier, vol. 108(C).
    5. Demary, Markus & Hasenclever, Stefan & Hüther, Michael, 2020. "How will the COVID-19-crisis affect the trend in corporate saving?," IW-Reports 61/2020, Institut der deutschen Wirtschaft (IW) / German Economic Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maas, Daniel & Mayer, Eric & Rüth, Sebastian K., 2018. "Current account dynamics and the housing cycle in Spain," Journal of International Money and Finance, Elsevier, vol. 87(C), pages 22-43.
    2. Francesco Furlanetto & Francesco Ravazzolo & Samad Sarferaz, 2019. "Identification of Financial Factors in Economic Fluctuations," The Economic Journal, Royal Economic Society, vol. 129(617), pages 311-337.
    3. Mayer, Eric & Rüth, Sebastian & Scharler, Johann, 2016. "Total factor productivity and the propagation of shocks: Empirical evidence and implications for the business cycle," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 335-346.
    4. Baumeister, Christiane & Hamilton, James D., 2020. "Drawing conclusions from structural vector autoregressions identified on the basis of sign restrictions," Journal of International Money and Finance, Elsevier, vol. 109(C).
    5. Gehrke, Britta & Yao, Fang, 2017. "Are supply shocks important for real exchange rates? A fresh view from the frequency-domain," Journal of International Money and Finance, Elsevier, vol. 79(C), pages 99-114.
    6. Maas, Daniel & Mayer, Eric & Rüth, Sebastian, 2015. "Current account dynamics and the housing boom and bust cycle in Spain," W.E.P. - Würzburg Economic Papers 94, University of Würzburg, Department of Economics.
    7. Castelnuovo, Efrem, 2016. "Modest macroeconomic effects of monetary policy shocks during the great moderation: An alternative interpretation," Journal of Macroeconomics, Elsevier, vol. 47(PB), pages 300-314.
    8. Baumeister, Christiane & Hamilton, James D., 2021. "Reprint: Drawing conclusions from structural vector autoregressions identified on the basis of sign restrictions," Journal of International Money and Finance, Elsevier, vol. 114(C).
    9. Nadav Ben Zeev, 2019. "Is There A Single Shock That Drives The Majority Of Business Cycle Fluctuations?," Working Papers 1906, Ben-Gurion University of the Negev, Department of Economics.
    10. Rüth, Sebastian & Mayer, Eric & Scharler, Johann, 2014. "TFP and the Transmission of Shocks," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100549, Verein für Socialpolitik / German Economic Association.
    11. Robin Braun & Ralf Brüggemann, 2017. "Identification of SVAR Models by Combining Sign Restrictions With External Instruments," Working Paper Series of the Department of Economics, University of Konstanz 2017-07, Department of Economics, University of Konstanz.
    12. Hristov, Nikolay & Hülsewig, Oliver & Wollmershäuser, Timo, 2020. "Capital flows in the euro area and TARGET2 balances," Journal of Banking & Finance, Elsevier, vol. 113(C).
    13. Gehrke, Britta & Yao, Fang, 2014. "Phillips curve shocks and real exchange rate fluctuations: SVAR evidence," FAU Discussion Papers in Economics 11/2014, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    14. Filipa Sá & Tomasz Wieladek, 2015. "Capital Inflows and the U.S. Housing Boom," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S1), pages 221-256, March.
    15. Baumeister, Christiane & Hamilton, James D., 2018. "Inference in structural vector autoregressions when the identifying assumptions are not fully believed: Re-evaluating the role of monetary policy in economic fluctuations," Journal of Monetary Economics, Elsevier, vol. 100(C), pages 48-65.
    16. Danne, Christian, 2015. "VARsignR: Estimating VARs using sign restrictions in R," MPRA Paper 68429, University Library of Munich, Germany.
    17. Alessio Volpicella, 2022. "SVARs Identification Through Bounds on the Forecast Error Variance," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(3), pages 1291-1301, June.
    18. Breitenlechner, Max & Mathy, Gabriel P. & Scharler, Johann, 2021. "Decomposing the U.S. Great Depression: How important were loan supply shocks?," Explorations in Economic History, Elsevier, vol. 79(C).
    19. IIBOSHI, Hirokuni & IWATA, Yasuharu, 2023. "The Nexus between Public Debt and the Government Spending Multiplier: Fiscal Adjustments Matter," MPRA Paper 116347, University Library of Munich, Germany.
    20. Yasuharu Iwata & Hirokuni IIboshi, 2023. "The Nexus between Public Debt and the Government Spending Multiplier: Fiscal Adjustments Matter," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(4), pages 830-858, August.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ifowps:_280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.