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International Implications of German Unification

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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. 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.
    3. 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.
    4. 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.
    5. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429.
    6. Hans‐Werner Sinn, 1984. "Die Bedeutung des Accelerated Cost Recovery System für den internationalen Kapitalverkehr," Kyklos, Wiley Blackwell, vol. 37(4), pages 542-576, November.
    7. Hans-Werner Sinn & Alfons J. Weichenrieder, 1997. "Foreign direct investment, political resentment and the privatization process in eastern Europe," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 12(24), pages 178-210.
    8. Rose, Andrew K. & Svensson, Lars E. O., 1994. "European exchange rate credibility before the fall," European Economic Review, Elsevier, vol. 38(6), pages 1185-1216, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Eichengreen, Barry & Naef, Alain, 2022. "Imported or home grown? The 1992–3 EMS crisis," Journal of International Economics, Elsevier, vol. 138(C).
    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. Hans-Werner Sinn & Holger Feist, 1997. "Eurowinners and Eurolosers: The Distribution of Seignorage Wealth in EMU," CESifo Working Paper Series 134, CESifo.
    5. Sinn, Hans-Werner & Feist, Holger, 1997. "Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU1," European Journal of Political Economy, Elsevier, vol. 13(4), pages 665-689, December.
    6. Hans-Werner Sinn & Frank Westermann, 2001. "The Deutschmark in Eastern Europe, Black Money and the Euro: On the Size of the Effect," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(03), pages 35-40, February.
    7. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    8. Hans-Werner Sinn & Frank Westermann, 2000. "Two Mezzogiornos," CESifo Working Paper Series 378, CESifo.
    9. repec:spo:wpecon:info:hdl:2441/7162 is not listed on IDEAS
    10. Gwen Eudey, 1998. "Why is Europe forming a monetary union?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 13-21.
    11. repec:hal:spmain:info:hdl:2441/7162 is not listed on IDEAS
    12. repec:hal:wpspec:info:hdl:2441/7162 is not listed on IDEAS
    13. Maurice Obstfeld, 1997. "Europe's Gamble," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 241-317.
    14. Alesina, Alberto Francesco, 1997. "Comments on 'Europe's Gamble' by M. Obstfeld," Scholarly Articles 12553725, Harvard University Department of Economics.
    15. Paul-Emmanuel Micolet, 1998. "Positionnement conjoncturel du Royaume-Uni et UEM," Revue de l'OFCE, Programme National Persée, vol. 66(1), pages 127-169.

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    More about this item

    Keywords

    Direct Investment; Joint Ventures; Privatization; Transformation Economies;
    All these keywords.

    JEL classification:

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

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