The New Economic Geography predicts a positive effect of market access on wages, as represented by the wage equation. Several studies provide empirical evidence in favor of the wage equation. However, a key problem is the endogeneity of market access: it is challenging to identify the causal...

Nach der deutschen Vereinigung wurde eine Vielzahl von Maßnahmen ergriffen, um die Infrastruktur in den neuen Bundesländern zu verbessern oder aufzubauen, die Investitionstätigkeit zu fördern und den Anpassungsprozeß sozialpolitisch abzufedern. Die Transfers von West nach Ostdeutschland...

The obsolete capital stock in eastern Germany has to be rebuilt. This will increase the capital demand in Germany for the next few years. In addition to the increased demand for capital, government transfers need to be financed. The macroeconomic accounting identity requires that net savings of...

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...

The macroeconomic development in West Germany in the aftermath of unification was characterized by a boom period in 1990/1991, a deep recession in 1992/1993 and a slow recovery since then. In East Germany, in contrast, unification induced a breakdown of production and employment followed by a...

Unification fundamentally changed the terms of quantitative macroeconomic analysis for Germany. Two main areas concerned are data availability for the eastern part of Germany and structural changes within the behavioural equations after unification. Our paper presents results from the estimation...

German unifikation hit the West German economy in a prosperous and appeared as a huge demand shock at least for the first few quarters. This combination resulted in a major increase of imports from the main trading partners of West Germany, which may have helped to cushion recessionary trends...

This paper presents estimates of the unification bonus for East Germans over the period 1991 to 1998. The unification bonus is defined as the discounted value of the difference between a person?s actual income and his or her counterfactual real income stream forecast for a hypothetical...