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German Reunification, Economics Of

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The New Palgrave Dictionary of Economics


German reunification in 1990 posed the challenge of introducing markets to an economy with none. For citizens of the formerly Communist East Germany, the transition brought an immediate increase in political freedom and living standards, yet also a deep trough in output and persistent unemployment. I examine the reasons for the output trough and the subsequent labour market difficulties, analyse the impact of reunification on West Germany and Europe, and draw lessons for transition and economics generally.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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I am very grateful to Michael Burda, Wendy Carlin, Adam Posen and Harald Uhlig for helpful discussions, and to Karl Brenke, Michaela Kreyenfeld, Joachim Ragnitz and Werner Smolny for generously and quickly providing me with data.

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Hunt, J. (2008). German Reunification, Economics Of. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London.

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  • Publisher Name: Palgrave Macmillan, London

  • Online ISBN: 978-1-349-95121-5

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