Analysis of convergence process of East German economy on the base of a two-region growth model

F.S. Kilin ()

GE, Growth, Math methods from EconWPA

Abstract: The main purpose of the paper is to analyse the speed of regional convergence of unified Germany on the basis of a two-region growth model with public productive spending. The model explains the dynamics of convergence, taking into account high fixed wages in East Germany, recent dynamics of public productive spending, government subsidies for private investments and a structure of human capital in both parts of Germany. The paper detects a new possible cause of the recent halt of East German economic convergence, namely the influence of pre- unification educational infrastructure dynamics. Using the model, we estimate numerically different reform strategies, which have the goal to increase the speed of convergence.

Keywords: East; Germany; Ostdeutschland; convergence; fixed; wages; education; two-region; growth; human; capital; collateral; unemployment; infrastructure; traffic; trade; union; subsidies; employers; organisation (search for similar items in EconPapers)
JEL-codes: C6 D5 D9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-geo and nep-tra
Date: 2003-04-26
Note: Type of Document - Acrobat PDF; prepared on Windows NT; to print on HP; pages: 20 ; figures: included
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpge:0304002

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