Economic Implications of German Unification for the Federal Republic and the Rest of the World

Author/Editor:

Paul R Masson ; Guy M Meredith

Publication Date:

September 1, 1990

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The economic effects of German unification are first discussed in the context of a global saving/investment model. Next, simulations of MULTIMOD are presented, suggesting for the FRG an initial increase in long-term real interest rates equal to 3/4 of a percentage point, increased output, a temporary half-point rise in inflation, a modest real appreciation of the deutsche mark, and a reduction of the (combined GDR and FRG) current account surplus equal to 2 percent of GNP. Effects on the rest of the world seem to be relatively small. Different policies are examined within the EMS, and other simulation studies are surveyed.

Series:

Working Paper No. 1990/085

Subject:

Exchange rates Financial services Foreign exchange Inflation Potential output Prices Production Real exchange rates Real interest rates

English

Publication Date:

September 1, 1990

ISBN/ISSN:

9781451954197/1018-5941

Stock No:

WPIEA0851990

Pages:

54

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