1,823 research outputs found

    The economic integration of Germany

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    In the integration of the two Germanies two countries will be united which differ widely in their institutional and constitutional arrangements as well as in their monetary systems and real economic conditions. Integration therefore means - harmonization of the institutional systems, - introduction of a common currency and a unified monetary policy, and - adjustment in the real economies. In the process of integration, these three aspects of institutional harmonization, establishing a single monetary policy and bringing the real economic conditions closer to each other will overlap. The final state of the integration process is a fully integrated economic union. In the commodity markets, the law of one price will govern for tradeables. The prices for non-tradeables such as housing and some services will differ among regions. In the factor markets, one price will prevail for any given factor that is completely mobile. Interest rates and the marginal productivity of capital will be identical everywhere. However, prices of immobile factors of production such as land and the environment will differ from region to region. Labor will be in an intermediate position. Insofar as labor is completely mobile, real wages tend to equalize; they can, however, be different when the costs of living vary over space. When labor is only partly mobile and when preferences for specific locations exist, real wages may be more differentiated. On the monetary side, there will be only one currency whose value is determined by the money supply of one central bank. The social security systems will be harmonized. The state, including the provision of public goods and the tax system, will be homogeneous, notwithstanding federal elements. Finally, the firms and the sectorial structure in the economic union will have adjusted to the new conditions, and the German Democratic Republic (GDR) will have caught up in income per head. --

    An Economic Life in Vain − Path Dependence and East Germanyñs Pre- and Post-Unification Economic Stagnation

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    20 years after unification, the East German twin’s economic position is relatively stagnant compared to most of the West German productivity and income variables. The strong initial takeoff until the mid-end 1990s ended at a level of 70% to 80% of the western reference. In this paper, two interdependent hypotheses are put to the test: (i) that the communist economy prior to unification was on a stagnating path contrary to what standard analyses show; (ii) that strong elements of path dependence exist and that the switch from plan to market offset the pre-unification stagnation but was not able to repair structural deficits inherited from the past. In fact, looking into West German long-term data, an extremely stable development path can be found that extends from the 19th century to the present. Thus, the analysis of the East German development path is both economically relevant and politically interesting if economic policies are to be formulated.East Germany, time series, income, institution, product, unification, economic growth, convergence

    The improvement of housing conditions in post com-munist Germany – Market Mechanisms and Subsidy Impacts

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    The objective of this paper is to explain the mechanisms that have lead to the remarkable improvement of the East German Housing Market during transition after the political change in 1989 and the reunification of Germany in 1990. Theoretical analysis suggests, that housing policy of the former GDR did not maximize consumer`s utility. Socialistic housing and construction policy limited the welfare with and distorted construction costs and rent control. The reason for that was not alone a lack of quantity but also a lack of quality and diversity. Therefore we argue that diversification of quality and te-nure in the post communist era enhanced the welfare of consumers. We propose that welfare on the East German Housing market was significantly increased by creating a new variety of housing types and qualities which fits better with different preferences of the households. A filtering model predicts theoretically the observable trends of seg-mentation and the development of a higher diversity of housing market segments. But additionally to the transition a bunch of subsidies were set up during transition. There-fore the paper is focused on the interdependency between housing market subsidies, the supply cost function, the qualitative development of the housing stock and the choice of demand. Empirically we observe the change and qualitative improvement of housing conditions in East Germany during transition and quantitative effects like increased vacancy risk in a shifted hierarchy of housing qualities.

    A tale of two states: a comparative study of higher education reform and its effects on economic growth in East and West Germany 1945 - 1989

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    The hypothesis at the heart of this thesis is that long-term economic growth depends on the discovery and development of new ideas and technologies which enable innovation resulting in increased productivity. As technological innovation generally results from research processes instigated and performed by those with higher levels of education, it becomes important to analyse higher education as an economic actor as well as a symbolic institution of cultural and elite reproduction. The thesis compares the development of higher levels of human capital in East and West Germany over the period 1945 – 1990: states with two very different and competing myths of democratic legitimacy and radically opposed social, political and economic systems but both convinced that human capital development held the key to reconstruction and economic growth. In highlighting the imperatives for reform and outlining the main changes which took place in higher education within the strictures imposed by competing ideologies, the thesis assesses the effectiveness of human capital investment in terms of the success of the economic objectives identified by both countries. The thesis finds that the initial hypothesis is proven, albeit that its effectiveness was mitigated by a number of external economic shocks and internal social and political factors which, in the end, led to the demise of the East German regime
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