Canova, Fabio; Ravn, Morten O. - Department of Economics and Business, Universitat … - 2000
We study the effects of German unification in a model with capital accumulation, skill differences and a welfare state …. Absent a welfare state, we observe an investment boom, depressed output and employment conditions. Capital owners and high …-skilled agents are willing to give up to 4% of per-capita consumption to favor unification. When a welfare state exists the …
