Naxitis: Could Germany choose to pull out of the euro?

Some voices in Germany suggest that Germany should leave the euro. Could

this opinion, rationally and not emotionally, be adopted by a majority of the

Germans?

-Pulling out of the euro would at best have one advantage for Germany:

it would avoid a complete mutualisation of the euro zone’s public debt

and a move towards federalism that would offset Germany's external

surplus with the euro zone;

-The cost of leaving the euro would be twofold: first, a currency loss on

Germany's gross (and not net) assets against the other euro-zone

countries; second, a loss of competitiveness due to the appreciation of

the "mark" against the other euro-zone currencies.

A reasonable estimate of these effects shows (see the details of the

calculation in the conclusion) that Germany would clearly lose out byleaving the euro. 

Conclusion: Can the "anti-euro" faction grow in Germany if it uses rational arguments?

 

For the "anti-euro" faction to grow significantly in Germany by using rational

arguments,the gain for Germany in leaving the euro must outweigh the loss.

We estimate the gain (no mutualisation of public debt, no federalism)

for Germany to 3.9 percentage points of GDP per year at the most. We estimate

the (one-off) loss triggered by the withdrawal from the euro to 21 percentage

points of GDPdue to the capital loss on Germany's gross external assets and

to 3.9 percentage points of GDP per year due to the loss of competitiveness. 

All n all, it seems clear that Germany would lose out by leaving the euro.

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