This document analyzes current account balances as a percentage of GDP from 1997-2011 for Germany, France, and several southern European countries known as the PIIGS (Portugal, Italy, Ireland, Greece, Spain). The charts show that while Germany maintained a high current account surplus over this period, the PIIGS countries and France experienced growing current account deficits. The authors argue that Germany's labor market reforms helped it increase competitiveness and exports relative to these other European economies.

1. How Germany's Labor Market
Reforms Crushed the French and
the PIIGS
Stephanie Kelton, Associate Professor of Economics
University of Missouri – Kansas City
Avraham Baranes, Ph.D. Student, Dept. of Economics
University of Missouri – Kansas City

2. Current Account 1997
4.0%
3.0%
2.0%
1.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%

3. Current Account 1998
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%

4. Current Account 1999
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-2.0%
Percent of GDP
-4.0%
-6.0%
-8.0%
-10.0%

5. Current Account 2000
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-2.0%
Percent of GDP
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%

6. Current Account 2001
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-2.0%
Percent of GDP
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%

7. Current Account 2002
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-2.0%
Percent of GDP
-4.0%
-6.0%
-8.0%
-10.0%

8. Current Account 2003
3.0%
2.0%
1.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-1.0%
Percent of GDP
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%

9. Current Account 2004
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%

10. Current Account 2005
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%

11. Current Account 2006
8.0%
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%

12. Current Account 2007
10.0%
5.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-5.0%
-10.0%
-15.0%
-20.0%

13. Current Account 2008
10.0%
5.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-5.0%
-10.0%
-15.0%
-20.0%

14. Current Account 2009
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
-2.0%
Percent of GDP
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%

15. Current Account 2010
8.0%
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%

16. Current Account 2011
8.0%
6.0%
4.0%
2.0%
0.0%
Portugal Italy Ireland Greece Spain Germany France
Percent of GDP
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%