Insufficient data, short time spans, illusions and multiple pressures: designing the German Monetary Union in 1990

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    Abstract

    The German unification in 1990 generated many benefits, but also many disappointments.
    After the introduction of the monetary union between the GDR and West Germany on 1 July 1990, the East German industry collapsed, and mass unemployment became persistent. Ever since the modalities of the monetary union have been discussed controversially. This paper reconstructs the decision-making processes and negotiations towards monetary union. To a high extent, this reconstruction is based on original documents. Early on in Bonn a consensus was reached that monetary union had to be introduced soon, the rapid decline of the GDR making stepwise approaches impossible. Many officials were aware of the detrimental effects of a 1:1 conversion of the wages. But few dared to go against the widespread demands for 1:1 in the GDR population and government, not the least because of over-optimistic promises before the elections in the GDR in March 1990.
    Original languageEnglish
    JournalEconomics and Business Review
    Volume5 (19)
    Issue number1
    Pages (from-to)53-78
    Number of pages26
    ISSN2392-1641
    DOIs
    Publication statusPublished - Apr 2019

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