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Regional Labor Markets, Network Externalities and Migration: The Case of German Reunification

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Author Info
Harald Uhlig

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Abstract

This paper analyzes the cost of disinflation under real wage rigidities in a micro-founded New Keynesian model. Unlike Blanchard and Galí (2007) who carried out a similar analysis in a linearized framework, we take non-linearities into account. We show that the results change dramatically, both qualitatively and quantitatively, for the steady states and for the dynamic adjustment paths. In particular, a disinflation implies a prolonged slump without any need for real wage rigidities.

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Publisher Info
Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1311.

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Length: 18 pages
Date of creation: Feb 2007
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Handle: RePEc:kie:kieliw:1311

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Related research
Keywords: Disinflation Sticky Prices Real Rigidities

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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  1. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August. [Downloadable!] (restricted)
  2. Fabio Canova & Morten O. Ravn, 2000. "The Macroeconomic Effects of German Unification: Real Adjustments and the Welfare State," Economics Working Papers 442, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  3. Richard Rogerson & Robert Shimer & Randall Wright, 2004. "Search-Theoretic Models of the Labor Market-A Survey," NBER Working Papers 10655, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 375-382, May.
    Other versions:
  5. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429, September.
  6. Sinn, Hans-Werner, 2002. "Germany's Economic Unification: An Assessment after Ten Years," Review of International Economics, Blackwell Publishing, vol. 10(1), pages 113-28, February. [Downloadable!] (restricted)
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  7. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, 03.
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  10. Jennifer Hunt, 2006. "Staunching Emigration from East Germany: Age and the Determinants of Migration," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 1014-1037, 09. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bruno Deffains & Dominique Demougin, 2006. "Institutional Competition, Political Process and Holdup," SFB 649 Discussion Papers SFB649DP2006-027, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  2. Denis Belomestny & Markus Reiß, 2006. "Spectral calibration of exponential Lévy Models [1]," SFB 649 Discussion Papers SFB649DP2006-034, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  3. Denis Belomestny & Markus Reiß, 2006. "Spectral calibration of exponential Lévy Models [2]," SFB 649 Discussion Papers SFB649DP2006-035, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  4. Stepán Jurajda & Katherine Terrell, 2007. "Regional Unemployment and Human Capital in Transition Economies," IZA Discussion Papers 3176, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Kai Detlefsen & Wolfgang Härdle, 2006. "Forecasting the Term Structure of Variance Swaps," SFB 649 Discussion Papers SFB649DP2006-052, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  6. Michael C. Burda, 2007. "What kind of shock was it? Regional Integration and Structural Change in Germany after Unification," Kiel Working Papers 1306, Kiel Institute for the World Economy. [Downloadable!]
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  7. Jens Rubart & Willi Semmler, 2007. "East German Unemployment from a Macroeconomic Perspective," Darmstadt Discussion Papers in Economics 187, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
  8. Dominique Demougin & Anja Schöttner, 2006. "Technological Choice under Organizational Diseconomies of Scale," SFB 649 Discussion Papers SFB649DP2006-028, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  9. Wolfgang Härdle & Rouslan Moro & Dorothea Schäfer, 2006. "Graphical Data Representation in Bankruptcy Analysis," SFB 649 Discussion Papers SFB649DP2006-015, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  10. Matthias Paustian & Christian Stoltenberg, 2006. "Optimal Interest Rate Stabilization in a Basic Sticky-Price Model," SFB 649 Discussion Papers SFB649DP2006-072, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  11. Enzo Giacomini & Wolfgang Härdle & Ekaterina Ignatieva & Vladimir Spokoiny, 2006. "Inhomogeneous Dependency Modelling with Time Varying Copulae," SFB 649 Discussion Papers SFB649DP2006-075, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  12. Lydia Mechtenberg, 2006. "Cheap Talk in the Classroom," SFB 649 Discussion Papers SFB649DP2006-019, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  13. Carsten Trenkler & Pentti Saikkonen & Helmut Lütkepohl, 2006. "Testing for the Cointegrating Rank of a VAR Process with Level Shift and Trend Break," SFB 649 Discussion Papers SFB649DP2006-067, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  14. Lydia Mechtenberg & Roland Strausz, 2006. "The Bologna Process: How Student Mobility Affects Multi-Cultural Skills and Educational Quality," SFB 649 Discussion Papers SFB649DP2006-018, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  15. Merkl, Christian & Snower, Dennis J., 2008. "Escaping the Unemployment Trap: The Case of East Germany," IZA Discussion Papers 3681, Institute for the Study of Labor (IZA). [Downloadable!]
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