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Article: International perspective: reunification in Germany - its economic and financial implications.
- Article from:
- Business Economics
- Article date:
- July 1, 1990
- Author:
CopyrightCOPYRIGHT 1990 The National Association for Business Economists. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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West Germany will pay a huge price for reunification by subsidizing the social security system in East Germany, by supporting and financing investments in the presently extremely poor infrastructure in the GDR and by offering attractive fiscal incentives to au who are ready to make direct investments in the GDR. Expansive fiscal measures will cause some acceleration in the inflation rate. The German Bundesbank will tighten its restrictive policy somewhat further. Capital market rates already have increased by more than I percent; not much further increase is expected. The DMark exchange rate will be kept quite stable by high (real) interest rates and positive long-term ...