International Implications of German Unification
CES Working Paper Number 117
Posted: 5 Dec 1996
Date Written: October 1996
This paper advances the hypothesis that the EMS crisis was caused by German unification. The unification has implied a massive resource demand which parallels the U.S. resource demand following Reagan's tax reforms in the eighties. The resource demand revised the German interest rates relative to the rest of the world, which brought about devaluations of other European currencies. The paper identifies those European currencies needing revaluation before they can join the European Currency Union.
JEL Classification: F33
Suggested Citation: Suggested Citation