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Why a Franco-German bargain will help secure the euro

The op-ed was first published on FT.com on August 9, 2017.

The gains would outweigh the costs and help chart a path for the continent’s future

As Germany heads towards its general election one of the debates in Berlin and elsewhere is what course the next government will pursue on Europe. In particular there is much speculation about a possible “grand bargain” between France and Germany that would see Berlin re-engage in reforming Europe.

At the centre of such a … [continue reading]

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Helmut Kohl Was Right

Economists criticize his decisions on German reunification and the euro, but he understood better the relationship between politics and economics.

Helmut Kohl’s death earlier this month has revived a contentious debate over his legacy. Although the former chancellor of Germany is widely considered to be a political genius, conventional wisdom holds that his economic policy was a failure. It’s time to reassess that view. Kohl was smarter on economics than many professional economists are willing to admit.

The arguments that … [continue reading]

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The Shrinkage in Earned Income

This text was also published in German in ZEIT ONLINE on May 12 as part of the op-ed column “Fratzschers Verteilungsfragen“.

The International Monetary Fund (IMF) has attracted attention with its most recent World Economic Outlook. The report shows that the global workforce is receiving a decreasing proportion of economic output, whereas owners of capital are claiming a larger piece of the pie for themselves. Germany stands out as one of the countries where the proportion benefiting workers is … [continue reading]

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Statement on the ECB council meeting (April 27, 2017)

It is wise for the ECB to stick to its policy strategy and not let itself be impressed by criticism from Germany. The pressure from Germany for the ECB to end its expansionary policy stance prematurely has increased. The ECB is right to resist the pressure from Germany as the economic and financial risks for the euro area are still significant.

The ECB is only gradually getting closer to meeting its price stability mandate as in particular core inflation is … [continue reading]

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There is no need to take in order to give

This text was also published in German in ZEIT ONLINE on March 31 as part of the op-ed column “Fratzschers Verteilungsfragen“.

Social inequality has become the main issue of political contention in Germany. The trenches are deeper and the struggle more vociferous than for any other issue. One camp wants to fortify society’s most vulnerable segments; the other believes that top performers should be rewarded. There are even intra-party rifts with no reconciliation in sight. But both sides are on … [continue reading]

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Elites turning a blind eye to social inequality

This text was also published in German in ZEIT ONLINE on December 23 as part of the op-ed column “Fratzschers Verteilungsfragen“.

Germany’s widespread social inequality is real – but politicians are still in denial.

“The people may get most facts wrong, but their feelings are mostly correct,” wrote Kurt Tucholsky, with a dash of irony, on the political manipulation of Germany’s citizens. Though the quote is from 1931, it still holds true today. Significant portions of Germany’s population are feeling … [continue reading]

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America First, But Germany Second

If Trump wants a Europe that takes care of its own needs, he needs a strong partner in Berlin.

Donald Trump’s relationship with Angela Merkel has gotten off to a rocky start. Trump has, effectively, singled out Germany and its chancellor as his main nemesis in Europe. He has criticized her for her policy toward refugees, for an unfair trade policy, and for a lack of leadership in Europe. For its part, the German government, alongside many of its European … [continue reading]

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Germany’s Misunderstood Trade Surplus

Now that Germany’s current-account surplus has reached a record €270 billion ($285 billion), or close to 8.7% of GDP, the ongoing debate about its economic model has intensified. Eurozone politicians and Donald Trump’s administration in the United States are each blaming the other for the economic imbalance; and all are blaming the euro.

Trump’s administration, for its part, has attacked Germany for exporting too much, and accused it of manipulating the euro. In fact, Germany’s trade surplus has little to … [continue reading]

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A German debate over the future of Europe is long overdue

The op-ed was first published on FT.com on February 28, 2017.

The emergence of Martin Schulz as the centre-left Social Democrats’ (SPD) candidate for chancellor has fundamentally altered the dynamics of German politics. It is also changing the debate in Germany on inequality and the future of Europe in ways that will have a significant impact across the continent.

Germany is regarded as an economic success story. Unemployment is at its lowest level since reunification, while the trade surplus has … [continue reading]

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No envy, please!

This text was also published in German in  ZEIT ONLINE on February 3,  as part of the op-ed column “Fratzschers Verteilungsfragen“.

“Time for fairness“ is the motto of the new candidate for Chancellor of the German Social Democrats, Martin Schulz, in his campaign against Angela Merkel. The slogan is bound to strike a chord in a country where 70 percent of the people feel that inequality is too high. But the issue of fairness should not be the one at … [continue reading]

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