This paper examines data on trade flows between West German Bundesländer (federal states) and East Germany to explore the effect of national borders on trade. Although the data cover only a small fraction of intra-German trade flows, I find a home bias of about factor 2.2; West German shipments...

According to a widespread view, Germany's unemployment crisis is caused by rigid labour markets, low profitability and increasing international competition. We argue that this view does not provide a convincing explanation for the dramatic rise in Germany's unemployment rate since 1989, first...

Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade both in the cross-section and over time. With the fall of the Berlin Wall and the rapid formation of a political and...

Mit dem Fall der Berliner Mauer verschwanden auch sämtliche administrativen Barrieren. Aus zwei zuvor getrennten Gebieten wurde quasi über Nacht ein Wirtschaftsraum. Die Ökonomen hatten dabei die nahezu einzigartige Möglichkeit, die Reaktion von Wirtschaftssystemen auf umfangreiche und...

Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade both in the cross-section and over time. With the fall of the Berlin Wall and the rapid formation of a political and...