Based on explicit present value calculations, the paper criticizes the view that the PAYGO system wastes economic resources. In present value terms, there is nothing to be gained from a transition to a funded system even though the latter offers a permanently higher rate of return. The sum of...

A political miracle occurred when Germany was reunited, and at first glance an economic miracle has followed. Real incomes in the east have now reached the western level, and investment per capita has been much higher than in the west. However, every third deutschmark spent in the east has been...

The eastern expansion of the EU resembles German unification in its momentousness. Whereas the latter led to a 26% increase in the population of the Federal Republic, the former will increase the population of the EU by 28% if all ten entry aspirants are accepted. A special problem will be posed...

Germany is in a dilemma. Low wage competition via product and factor markets increases the demands on the welfare state, but increased systems competition in the context of international factor mobility reduces the possibilities of maintaining it. The welfare state has important allocative...

The analogy between the economic problems of the Mezzogiorno region and East Germany has been initially contested by many authors. This paper argues that there are striking similarities in the two regions, in terms of the causes of their economic predicament. With an aggregate labour...

The rules laid down in Article 32 of the Protocol No. 18 on the Statute of the European System of Central Banks and of the European Central Bank of the Maastricht Treaty will significantly redistribute European seignorage income and hence the implicit entitlement to the 352 billion Euro stock of...

Contrary to a frequent contention, systems competition cannot work when governments respect the Subsidiarity Principle. The principle implies that governments step in where markets fail. Reintroducing markets through the back door of systems competition will again result in market failure. Three...

It is shown that the net fiscal externality created by an additional member of a pay-as-you-go pension system that is endowed with individual accounts equals the gross contributions" of this member. In Germany, this is an amount of about DM 175,000. The paper uses this" information to design a...

The paper discusses the options for a reform of the German pension system using a model developed at CES for the German Council of economic advisors to the Federal Ministry of Economics and Research. It is argued that the German pay-as-you-go-system is efficient in a present value sense but will...

This paper advances the hypothesis that the EUS crisis was caused by German unification. The unification has implied a massive resource demand which parallels the US resource demand following Reagan's tax reforms in the eighties. The resource demand revised the German interest rates relative to...