1. Folie 1 Current macroeconomic situation in Germany Martin Wenke Niederrhein University of Applied Sciences Faculty of Business Administration and Economics Mönchengladbach, Germany Niederrhein Institute for Regional and Structural Research (NIERS) Institute of Business Ethics and Sustainability (EthNa) Institute for Applied Sciences (IAW)

2. Folie 2 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 2 Highlight: 2014 recent news headlines (F.A.Z.) September: Business sentiment slumps again – and more than expected July: Monthly exports first time above 100 bill € threshold August: High order plus of industry dampens recession fears September: Higher purchasing power of households: wages grew faster than prices Summer: Euro zone inflation close to zero Summer: ECB under pressure Summer: Germany’s strong industry July: Unemployment growing Traffic jam blues

3. Folie 3 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 3 Part III Business Cycles and Keynesian Economics

4. Folie 4 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 4 Macroeconomic Theory and Time Horizon Long term production capacity/potential neoclassical theory Short term, actual measured production; Keynesian theory Time Output

5. Folie 5 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 5 Economic fluctuations – Business Cycle Phases of a Cycle % change of real GDP expansioncontraction upper turning point; peak, boom lower turning point, trough, recession cycle amplitude

6. Folie 6 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 6 Business Cycle – Theoretical basics of Keynesian model Medium/long term view (Neoclassical Macroeconomics): Aggregate Supply (max) = Production Capacity = f(Labour, Capital, Land) Short term view (Keynesian Macroeconomics) Aggregate Supply (current)= f(Aggregate Demand) Aggregate Demand(GDP)= Private Consumption (PC) + Governmental Expenditures (GE) +Capital Formation (real Inv.) (CF) + Export (EX) [- Import (IM)]

7. Folie 7 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 7 Business Cycle – Theoretical basics of Keynesian model – model of the entire economy (+) (-) (-) (+) EX = f(%WT, CER, TOT, IICP) -IM = f(PC, CF, EX) (+) (-) (+) CF = f(GDPc/GDPp, i, BSI) (+/-) (-) (+) (-) (-) GE = f(%GDPc/%GDPa, i, TXR, AGD, GDL) (+) (-) (-) (+) PC = f(PDY, i, UR, CCI) = GDP

8. Folie 8 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 8 Highlight: Managers sentiment and their confidence in Germanys economy - results of Ifo poll – 2005 = 100

9. Folie 9 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 9 Highlights: Current economic situation in Germany The Ifo Business Climate Index is based on ap. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as “good”, “satisfactorily” or “poor” and their business expectations for the next six months as “more favourable”, “unchanged” or “more unfavourable”. The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor”, the balance value of the expectations is the difference of the percentages of the responses “more favourable” and “more unfavourable”. The business climate is a transformed mean of the balances of the business situation and the expectations.

10. Folie 10 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 10 Business Cycle – Application Autumn 2014: Results of Joint Economic Forecast Main economic indicators Component201020112012201320142015 GDP, real %4,13,60,40,11,31,2 Unemployment rate %7,77,16,86,96,76,8 Employment 1 000 p41 02041 57042 03342 28142 60542 653 Inflation %1,12,12,01,51,01,4 Unit Labor Costs %-1,50,43,12,21,82,3 Current governm. Debt % of GDP -4,0-0,80,10,3 0,1 Trade surplus in % of GDP 5,76,17,16,86,96,6

11. Folie 11 | 03.09.2009 | BBA404 Macroeconomics | Prof. Dr. Martin Wenke | Economics Ecology and Ethics | Folie 11 Business Cycle – Application Autumn 2014: Results of Joint Economic Forecast Final Demand Components, constant 2010 prices, in % (Lundberg growth contribution) Component201320142015 GDP0,11,31,2 Private Consumption0,8 (0,5) 0,8 (0,5) 1,4 (0,9) Governmental Expenditures 0,7 (0,1) 0,9 (0,2) 1 (0,2) Capital Formation-0,7 (-0,0) 3,2 (0,8) 2,7 (0,4) Exports1,6 (0,7) 3,2 (1,5) 4,4 (2,0) Imports3,1 (-1,2) 4,2 (-1,7) 5,7 (-2,3)