The DM and the Ossi Consumer: Price Indexes During Transition

Family budget data for East and West Germany over the past decade are analyzed in the light of the convergence of relative price structures and the elimination of quantity constraints in the East during the process of eastern economic reconstruction. Exact cost-of-living indexes for generalized Cobb- Douglas preferences are calculated for the missing (index) link between the end of the old German Democratic Republic and the beginning of German economic unification. Exact deflators are provided for the period 1989 through 1998 for low to high income family budgets.