Living With a Single Monetary PolicyGermany

Living With a Single Monetary Policy

The Problem: Economic InequalityEffect on GermanyPotential SolutionsPolicy Recommendation

The Problem: Inequality

Source: The European Commission

The Problem: Inequality

Eurozone Average:2.4%

Germany:2.2%

Germany:83.2%

Eurozone Average:61.5%

Comparison of Government Debt, 2010

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Belg

ium

Germ

any

Eston

iaIrelan

dG

reeceSpain

France

ItalyC

ypru

sLu

xembou

rgM

altaN

etherlan

ds

Austria

Portugal

Sloven

iaSlovakia

Finlan

d

0.00%

50.00%

100.00%

150.00%

200.00%Esto

nia

Luxem

bou

rgSlo

venia

Slo

vakia

Finlan

dSpain

Cypru

sN

etherla

nds

Malta

Austria

France

Germ

any

Irela

nd

Portugal

Belg

ium

Italy

Gre

ece

Ave

rage

Government Deficit Averages 2000 to 2010

Source: The European Commission

Interest on Sovereign Bonds, 1995-2011

The Problem: Inequality

0.0

5.0

10.0

15.0

20.0

25.0

Germ

anyBelgium

EstoniaIrelandG

reeceSpainFranceItalyCyprus

Luxembourg

Malta

Netherlands

Austria

PortugalSloveniaSlovakiaFinland

Source: The European Commission

Eurozone Average:10.7%

Germany:5.8%

%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Belgium

Germ

anyEstoniaIrelandG

reeceSpainFranceItalyCyprus

Luxembourg

Malta

Netherlands

Austria

PortugalSloveniaSlovakiaFinland

Germany:2.5%

Eurozone Average:2.7%

Yearly Inflation Variation,2011

Current Unemployment Variation, November 2011

The Problem: Inequality

Average Net Trade Variation, 1999 to 2010

Germany:79.8 Billion

Source: The European Commission

In B

illio

ns

Eurozone Average:4.7 Billion

-20

-10

0

10

20

2001 2003 2005 2007 2009 2011

Belgium Germany EstoniaIreland Greece SpainFrance Italy CyprusLuxembourg Malta NetherlandsAustria Portugal SloveniaSlovakia Finland

Eurozone Average for 2011:1.4%

Germany for 2011:3.0%

The Problem: Inequality

-€ 60

-€ 40

-€ 20

€ 0

€ 20

€ 40

€ 60

€ 80

€ 100

€ 120

Belg

ium

Germ

any

Eston

iaIrelan

dG

reeceSpain

France

ItalyC

ypru

sLu

xembou

rgM

altaN

etherlan

ds

Austria

Portugal

Sloven

iaSlovakia

Finlan

d

Gross Domestic Production Trends

The Effect on Germany

The Effect on Germany

0 20000 40000 60000 80000

Spain

Japan

Italy

US

UK

Germany

France

Greece’s debt directly owed to the German Government:

15 billion Euros

Loans to Countries in Crisis

Source: Bank For International Settlements

Millions USD

Private Exposure

Government Exposure

France 9% United States 7%

Netherlands7%

UK 6%

Belgium 5%

Austria 5%China 6%

Italy 6%

Switzerland 4%

Poland 4%

Other 41%

Source: Statistisches Bundesamt Deutschland;CIA.gov

Total trade within the Eurozone:

41%

Percent of Workforce in Manufacturing:

29.7%

German Trade in the Eurozone

The Effect on Germany

Private German Exposure to Eurozone

0.00

50.00

100.00

150.00

200.00

250.00

Finla

nd

Gre

ece

Port

ugal

Belg

ium

Irela

nd

Italy

Luxe

mbourg

Spain

Neth

erl

ands

France

Billion

s U

SD

Non-bankPrivate SectorBanks

Public Sector

Source: Bank For International Settlements

The Effect on Germany

Potential Solutions

Financial SectorFiscal BudgetsPrivate Consumption

Pushing for Stimulus

Potential Solutions

CostlyUnpopularMay only have short-term effects

Drawbacks

Potential Solutions

Pushing for Austerity MeasuresMethods

Reducing Government ExpenditureRaising Government Funds

EnforcementChanging ManagementPolitical Agreements

Potential Solutions

Drawbacks

Risks deeper recessionUnpopularSlows growth

Potential Solutions

Policy Recommendation

Europe 2020

EducationGreen EnergyResearch and Development

Policy Recommendation

Implementation

Unemployment: 12%+Government Debt: 90%+ of GDPIreland, Portugal, Greece

Policy Recommendation

Drawbacks

Uneven financial supportLender Insecurity

Policy Recommendation

Policy Recommendation

“We will only be able to strengthen our common currency if we co-ordinate our policies more closely…”

–Angela Merkel

Prevention: Standardization

Stability and Growth PactAnnual financial inspectionTransparency

Policy Recommendation

Conclusion

InequalityGerman ConnectionStabilizationPreventionImplementation

References

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2012, from http://euobserver.com EuroMemo Group - European Economists for an Alternative Economic Policy in Europe . (n.d.).

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References Continued

The Financial Times. (n.d.). World business, finance, and political news from the Financial Times - FT.com. World business, finance, and political news from the Financial Times - FT.com. Retrieved March 19, 2012, from http://www.ft.com/

SPIEGEL ONLINE - Nachrichten. (n.d.). SPIEGEL ONLINE - Nachrichten. Retrieved March 19, 2012, from http://www.spiegel.de/

Statistical Offices of the L√ ｧ nder and the Federal Statistical Office. (n.d.). Gemeinsames Datenangebot der Statistischen √ ﾑmter des Bundes und der L√ ｧ nder. Retrieved

March 19, 2012, from http://www.statistik-portal.de/statistik-portal/en/ The European Central Bank. (n.d.). The European Central Bank. Retrieved March 12, 2019, from

www.ecb.int/ The European Commision. (n.d.). The European Commision. Retrieved March 12, 2019, from

ec.europa.eu/index_en.htm The European Union. (n.d.). The European Union. Retrieved March 12, 2019, from

www.eurunion.org/eu/ Times Topics - The New York Times. (n.d.). The New York Times - Breaking News, World News &

Multimedia. Retrieved March 19, 2012, from http://www.nytimes.com/pages/topics/

The Economist - World News, Politics, Economics, Business & Finance. The Economist - World News, Politics, Economics, Business & Finance. Retrieved March 19, 2012, from

http://www.economist.com/ European Banking Authority - EBA - Home. European Banking Authority - EBA - Home.

Retrieved March 19, 2012, from http://www.eba.europa.eu/