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In the international economic policy debate Germany is criticized heavily for its current account surplus. This paper describes the factors that have led to the surplus and discusses the policy implications. The current account surplus is mainly a result of higher savings, driven by an ageing population. The claim that the German surplus causes economic damage either in Germany or in other countries is not well founded. But Germany faces growing political pressures related to the threat of protectionism, the risk that a growing creditor position may lead to political backlash, and the fact that European Macroeconomic Imbalances Procedures imply that current account surpluses should not exceed six percent of GDP. To reduce the surplus Germany should focus on a corporate tax reform to boost private investment.

What is the future of fiscal governance in the Eurozone? In EconPol Europe’s first policy report Anne-Laure Delatte (CEPII), Clemens Fuest (ifo Institute), Daniel Gros (CEPS), Friedrich Heinemann (ZEW), Martin Kocher (IHS)and Roberto Tamborini (University of Trento) discuss various options for fiscal governance reform. The authors focus on two possible reform approaches referred to as the ‘Maastricht model’ and the ‘US model’. They argue that certain elements of the two approaches could be combined to achieve a more resilient and economically successful Eurozone.

EconPol Europe – The European Network for Economic and Fiscal Policy Research is a unique collaboration of policy-oriented university and non-university research institutes that will contribute their scientific expertise to the discussion of the future design of the European Union. In spring 2017, the network was founded by the ifo Institute together with eight other renowned European research institutes as a new voice for research in Europe.

EconPol Europe consists of six non-university research institutes and three European universities. Founding members are the ifo Institute (Munich), the Centre for European Policy Studies (CEPS, Brussels), the Centre d’Études Prospectives et d’Informations Internationales (CEPII, Paris), the Institute for Advanced Studies (IHS, Vienna), the Toulouse School of Economics, the University of Oxford (Centre for Business Taxation), the Università di Trento (Department of Economics and Management), the VATT Institute for Economic Research (VATT, Helsinki) and the Centre for European Economic Research (ZEW, Mannheim). This combined expertise will contribute new ideas and solutions to the debate on the pressing issues facing the European Union.