Germany should aim to cut corporate savings – ECB paper

Investment and banking reforms are needed to cut German firms’ savings, say researchers


German policy-makers should increase the absorption of their non-financial firms’ high savings, a working paper published by the European Central Bank argues.

In The corporate saving glut and the current account in Germany, Thorsten Klug, Eric Mayer and Tobias Schuler investigate three possible explanations for the country’s high budget surplus. These hypotheses are based around the shocks caused by financial friction, labour supply and world demand.

In the financial shock hypothesis, more

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