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Sectoral Adjustments In Eastern Germany Due to Market Forces *
Author(s) -
Paarlberg Philip L.
Publication year - 1994
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.1994.tb00033.x
Subject(s) - economics , spillover effect , wage , currency , agriculture , german , payment , monetary economics , international economics , macroeconomics , labour economics , history , ecology , archaeology , biology , finance
Some characteristics of the eastern German economy are analyzed as to their effects on the adjustment to market forces, using a modified Ricardo‐Viner model. Included are transfer payments, EC farm policy, wage policy, and currency overvaluation. the analysis shows that the adjustments for a sector cannot be understood solely in terms of developments in that sector alone. the wage policy and the currency conversion magnified the adjustments in agriculture. Agricultural policy dampened the decline in agricultural output and had positive spillover effects on nontraded goods. Such interconnections must be kept in mind when analyzing the reform process.