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International Implications of German Unification

Author

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  • Sinn, Hans-Werner

Abstract

This paper advances the hypothesis that the EMS crisis was caused by German unification. Unification stimulated massive resource demand, which paralleled resource demand in the United States following Reagan’s tax reforms in the 1980s. The resource demand revised German interest rates relative to the rest of the world, which brought about devaluations of other European currencies. The paper identifies those European currencies needing revaluation before they can join the European currency union.

Suggested Citation

  • Sinn, Hans-Werner, 1996. "International Implications of German Unification," CEPR Discussion Papers 1508, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1508
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    References listed on IDEAS

    as
    1. Wyplosz, Charles, 1991. "A Note on the Real Exchange Rate Effect of German Unification," CEPR Discussion Papers 527, C.E.P.R. Discussion Papers.
    2. Svensson, Lars E. O., 1994. "Fixed exchange rates as a means to price stability: What have we learned?," European Economic Review, Elsevier, vol. 38(3-4), pages 447-468, April.
    3. Charles Wyplosz, 1991. "On the real exchange rate effect of German unification," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 1-17, March.
    4. Hans-Werner Sinn & Alfons J. Weichenrieder, 1997. "Foreign direct investment, political resentment and the privatization process in eastern Europe," Economic Policy, CEPR;CES;MSH, vol. 12(24), pages 177-210, April.
    5. Adams, Gwyn & Alexander, Lewis & Gagnon, Joseph, 1993. "German unification and the European Monetary System: A quantitative analysis," Journal of Policy Modeling, Elsevier, vol. 15(4), pages 353-392, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gwen Eudey, 1998. "Why is Europe forming a monetary union?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 13-21.
    2. Stefano Schiavo, 2005. "Euro bonds: in search of financial spillovers," Sciences Po publications 2, Sciences Po.
    3. Michael C. Burda & Jennifer Hunt, 2011. "What Explains the German Labor Market Miracle in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 273-335.
    4. Feist, Holger & Sinn, Hans-Werner, 1997. "Eurowinners and Eurolosers: The Distribution of Seigniorage Wealth in EMU," CEPR Discussion Papers 1747, C.E.P.R. Discussion Papers.
    5. Hans Werner Sinn & Frank Westermann, 2001. "Die D-Mark in Osteuropa, das Schwarzgeld und der Euro: Zur Größe des Effektes," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(19), pages 18-23, October.
    6. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    7. Hans-Werner Sinn & Frank Westermann, 2000. "Two Mezzogiornos," CESifo Working Paper Series 378, CESifo Group Munich.
    8. Maurice Obstfeld, 1997. "Europe's Gamble," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 241-317.
    9. Alesina, Alberto Francesco, 1997. "Comments on 'Europe's Gamble' by M. Obstfeld," Scholarly Articles 12553725, Harvard University Department of Economics.
    10. repec:spo:wpecon:info:hdl:2441/7162 is not listed on IDEAS
    11. Paul-Emmanuel Micolet, 1998. "Positionnement conjoncturel du Royaume-Uni et UEM," Revue de l'OFCE, Programme National Persée, vol. 66(1), pages 127-169.

    More about this item

    Keywords

    Direct Investment; Joint Ventures; Privatization; Transformation Economies;

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook

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