Patrick Artus, Research Analyst at Natixis, notes that since the euro-zone crisis, Germany’s and the Netherlands’ excess savings have been lent to the world outside the euro zone, and no longer to the other euro-zone countries.
“If Germany’s and the Netherlands’ savings returned to financing investment in the euro zone, this would have two positive effects on euro-zone GDP:
- A direct demand-side effect due to the increase in investment in the euro zone excluding Germany and the Netherlands;
- A supply-side effect due to the increase in productive capital and potential GDP in the euro zone excluding Germany. This supplyside effect would be boosted by the high marginal productivity of capital in many euro-zone countries other than Germany and the Netherlands.”
“We have calculated: -
- The loss of GDP on the demand side caused by the fact that Germany’s and the Netherlands’ savings no longer finance corporate investment in the euro zone: it amounts to 1.5% to 3%;
- The loss of GDP on the supply side caused by the fact that the loss of corporate investment has reduced productive capital, especially in the countries where the marginal productivity of capital is high: it amounts to 12%.”
“Germany’s and the Netherlands’ unwillingness to lend their excess savings to the other eurozone countries since the euro-zone crisis has therefore come at a very significant cost.”
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