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The impact of German unification on West Germany's goods and labor market: A macroeconometric disequilibrium model in action

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  • Franz, Wolfgang
  • Heidbrink, Gustav W.
  • Smolny, Werner

Abstract

This paper constitutes an interim report on the development of a macroeconometric disequilibrium model. Despite several caveats the model as it stands can be used already for two purposes. First, it is possible to investigate the models forecasting abilities. While the estimation period of the model ends in 1989, the forecast is made for the time period 1990 to 1993: This time period includes two events which form a real challenge to every macroeconometric model, namely German unification and the most severe recession afterwards. Secondly, the model is used to quantify selected impacts of unification on some macroeconomic variables with an exclusive emphasis on the goods and labor market. By and large, the results are in line with intuition. West Germany benefitted from unification by experiencing higher output and employment and so did major trade partners.

Suggested Citation

  • Franz, Wolfgang & Heidbrink, Gustav W. & Smolny, Werner, 1993. "The impact of German unification on West Germany's goods and labor market: A macroeconometric disequilibrium model in action," Discussion Papers 7, University of Konstanz, Center for International Labor Economics (CILE).
    • Handle: RePEc:zbw:koncil:7
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    References listed on IDEAS

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    1. Franz, Wolfgang & Gordon, Robert J., 1993. "German and American wage and price dynamics : Differences and common themes," European Economic Review, Elsevier, vol. 37(4), pages 719-754, May.
    2. von Hagen, Jurgen, 1993. "Monetary union, money demand, and money supply : A review of the German monetary union," European Economic Review, Elsevier, vol. 37(4), pages 803-827, May.
    3. Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
    4. Hughes Hallett, A J & Ma, Yue, 1993. "East Germany, West Germany, and Their Mezzogiorno Problem: A Parable for European Economic Integration," Economic Journal, Royal Economic Society, vol. 103(417), pages 416-428, March.
    5. Franz, Wolfgang & Smolny, Werner, 1993. "Sectoral wage and price formation and working time in Germany: An econometric analysis," Discussion Papers 5, University of Konstanz, Center for International Labor Economics (CILE).
    6. International Monetary Fund, 1990. "German Unification; Economic Issues Occasional Paper No. 75," IMF Occasional Papers 1990/008, International Monetary Fund.
    7. Siebert, Horst, 1993. "The big bang with the big brother: German unification in its third year," Kiel Discussion Papers 211, Kiel Institute for the World Economy (IfW Kiel).
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    Cited by:

    1. Schellhorn, Martin & Winker, Peter, 1994. "Stochastic simulations of a macroeconomic disequilibrium model for West Germany," Discussion Papers, Series II 235, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Franz, Wolfgang & Göggelmann, Klaus & Winker, Peter, 1996. "Ein makroökonometrisches Ungleichgewichtsmodell für die deutsche Volkswirtschaft 1960 bis 1994: Konzeption, Ergebnisse und Erfahrungen," Discussion Papers, Series II 327, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Göggelmann, Klaus & Franz, Wolfgang & Winker, Peter, 1997. "Einige Wirkungen von steuerlichen Umfinanzierungsmaßnahmen in einem makroökonometrischen Ungleichgewichtsmodell für die westdeutsche Volkswirtschaft," ZEW Discussion Papers 97-19, ZEW - Leibniz Centre for European Economic Research.
    4. Franz, Wolfgang & Göggelmann, Klaus, 1996. "Geldpolitische Wirkungen in einem makroökonometrischen Ungleichgewichtsmodell für die westdeutsche Volkswirtschaft," Discussion Papers, Series II 307, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".

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