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SFB 649 Discussion Papers, HU Berlin >
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http://hdl.handle.net/10419/25170
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| Title: | | What kind of shock was it?: regional integration and structural change in Germany after unification  |
| Authors: | | Burda, Michael C. |
| Issue Date: | | 2006 |
| Series/Report no.: | | SFB 649 discussion paper 2006,087 |
| Abstract: | | Eastern Germany's recovery from the unification shock has been characterized by deep structural change - with apparent repercussions for the West as well - and an integration process involving both capital deepening (extensive and intensive investment) and labor thinning (net out-migration). I propose a constant-returns neoclassical model of economic integration which can account for these facts. Adjustment costs determine dynamics and steady state regional distribution of production factors. The model also explains persistent wage and capital rate-of-return differentials along the equilibrium path. Under competitive conditions, observed factor price differentials contain information on those adjustment costs. |
| Subjects: | | German reunification regional integration costs of adjustment capital mobility migration |
| JEL: | | F2 J61 P23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SFB 649 Discussion Papers, HU Berlin
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