Measuring the Contribution of Expenditure Growth and Expenditure Switching: The chapter introduces a decomposition of trade flows that allows to measure expenditure-growth effects (changes in domestic and foreign final demand) and expenditure-switching effects (changes in the allocation of demand across domestic and foreign producers). The decomposition is applied to 11 euro members 1990-2013. Most countries, including Germany, recorded unfavorable expenditure-switching effects (demand shifted from domestic to foreign producers); expenditure switching was most unfavorable in Finland, France, and Italy. There is no correlation between unit labor cost growth and expenditure switching.;Spillover Effects of Germany's Final Demand on Southern Europe: The chapter calibrates a closed multi-country input-output model with data from the World Input-Output Database to estimate spillover effects of Germany's final demand on GDP, employment, and the trade balance in Southern European countries. Spillover effects are found to be small. Germany alone is unable to make a significant contribution to the external adjustment process in the European South. A coordinated asymmetric expansion would help.;Offshoring, Employment, and Aggregate Demand: The chapter uses a demand-constrained small-open-economy model in the tradition of Keynes and Kalecki to study the effects of offshoring on aggregate demand and domestic employment. Offshoring is represented as labor-saving import-using technical change. The results depend on the behavior of the markup on unit costs. If firms absorb the competitiveness gain through higher markups, the scale effect of labor demand is negative, and offshoring unambiguously reduces domestic demand and employment. If the markup remains constant, the net effect of offshoring on domestic demand and employment is ambiguous; it depends crucially on the price elasticity of exports.
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