Canova, Fabio; Ravn, Morten - In: Review of Economic Dynamics 3 (2000) 3, pp. 423-460
We study the effects of German unification in a model with capital accumulation, skill differences and a welfare state. We argue that this event is similar to a mass migration of low-skilled agents holding no capital into a foreign country. Absent a welfare state, we observe an investment boom,...