's preferences in response to economic incentives. If financial markets are imperfect, this results in the stratification of society …

smoothing of a shock to a state’s gross domestic product by factor markets, the government sector, and credit markets …-unification Germany, we find that about 19 percent of a shock is smoothed by private factor markets, 50 percent is smoothed by the German … government sector, and a further 17 percent is smoothed through credit markets. For the postunification period, 1995 to 2006, the …

integration meant that foreign market access was the decisive factor; the North had the advantage of proximity to these markets. …