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The economic integration of Germany

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  • Siebert, Horst
Abstract
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.

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  • Siebert, Horst, 1990. "The economic integration of Germany," Kiel Discussion Papers 160, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkdp:160
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    Cited by:

    1. Ngo Long & Horst Siebert, 1992. "A model of the socialist firm in transition to a market economy," Journal of Economics, Springer, vol. 56(1), pages 1-21, February.
    2. Siebert, Horst, 1992. "Real adjustment in the transformation process: Risk factors in East Germany," Open Access Publications from Kiel Institute for the World Economy 1915, Kiel Institute for the World Economy (IfW Kiel).
    3. Éric Chaney & Laurent Kenigswald & Luc Véron, 1991. "L'unification allemande, un an après," Économie et Statistique, Programme National Persée, vol. 246(1), pages 11-28.
    4. Foders, Federico, 1990. "Helgolands Wirtschaft am Scheideweg," Kiel Working Papers 434, Kiel Institute for the World Economy (IfW Kiel).
    5. Nunnenkamp Peter, 1992. "Die wirtschaftspolitischen Herausforderungen der Umwandlung der ostdeutschen Wirtschaft," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 41(1-3), pages 51-70, January.
    6. Schmieding, Holger, 1991. "Die ostdeutsche Wirtschaftskrise: Ursachen und Lösungsstrategien. Anmerkungen im Lichte der westdeutschen Erfahrungen von 1948 und des polnischen Beispiels von 1990," Kiel Working Papers 461, Kiel Institute for the World Economy (IfW Kiel).
    7. Charles Wyplosz, 1991. "On the real exchange rate effect of German unification," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 1-17, March.
    8. Siebert, Horst, 1993. "German unification and its impact on net savings," Kiel Discussion Papers 216, Kiel Institute for the World Economy (IfW Kiel).
    9. Siebert, Horst, 1993. "The big bang with the big brother: German unification in its third year," Kiel Discussion Papers 211, Kiel Institute for the World Economy (IfW Kiel).
    10. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
    11. Schmidt, Klaus-Dieter & Naujoks, Petra, 1993. "De-industrialization or re-industrialization? On the future of the Eastern German economy," Kiel Working Papers 576, Kiel Institute for the World Economy (IfW Kiel).
    12. Misala, Józef, 1992. "Importance and patterns of Poland's trade with Germany," Kiel Working Papers 537, Kiel Institute for the World Economy (IfW Kiel).
    13. Schmidt, Klaus-Dieter, 1996. "German unification: A progress report," Kiel Working Papers 722, Kiel Institute for the World Economy (IfW Kiel).
    14. Siebert, Horst, 1991. "Die Integration Osteuropas in die Weltwirtschaft," Kiel Working Papers 491, Kiel Institute for the World Economy (IfW Kiel).
    15. Franz, Wolfgang, 1991. "Im Jahr danach: Bestandsaufnahme und Analyse der Arbeitsmarktentwicklung in Ostdeutschland," Discussion Papers, Series II 159, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    16. Hans-Werner Sinn, 1991. "Macroeconomic Aspects of German Unification," NBER Working Papers 3596, National Bureau of Economic Research, Inc.
    17. Lehment, Harmen, 1991. "Internationale Auswirkungen der deutschen Währungs-, Wirtschafts- und Sozialunion," Open Access Publications from Kiel Institute for the World Economy 2005, Kiel Institute for the World Economy (IfW Kiel).
    18. Sander, Birgit, 1992. "Foreign investors' activities in Eastern Germany motivations and strategies," Kiel Working Papers 550, Kiel Institute for the World Economy (IfW Kiel).
    19. Michael C. Burda, 1990. "Les conséquences de l'union économique et monétaire de l'Allemagne," Revue de l'OFCE, Programme National Persée, vol. 34(1), pages 215-238.
    20. Siebert, Horst & Schmieding, Holger & Nunnenkamp, Peter, 1991. "The transformation of a socialist economy: lessons of German unification," Kiel Working Papers 469, Kiel Institute for the World Economy (IfW Kiel).
    21. Siebert, Horst & Schmieding, Holger, 1990. "Restructuring industry in the GDR," Kiel Working Papers 431, Kiel Institute for the World Economy (IfW Kiel).

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