The conventional diagnosis of Germany’s poor economic performance focuses on supply-side weaknesses and the need for more vigorous reforms to make low-skill labour markets more flexible. We question this on both theoretical and empirical grounds. In an extended version of a New Keynesian model...

This paper uses a comparative and historical framework to evaluate the growth performance of the West German economy from the beginning of the post-war period in 1945 to the reunification of Germany in 1990. Cross-country growth equations are used at the outset to provide a benchmark against...

Two decades after the end of central planning, we investigate the extent to which the advantages bequeathed by planning in terms of high investment in physical infrastructure and human capital compensated for the costs in allocative inefficiency and weak incentives for innovation. We assemble...

In terms of macroeconomic performance, the Eurozone’s first decade is a story of successful inflation-targeting by the ECB for the common currency area as a whole combined with the persistence of real exchange rate and current account disequilibria at member country level. According to the...

This Paper examines the importance of competition in the growth and development of firms. We make use of the large-scale natural experiment of the shift from an economic system without competition to a market economy to shed light on the factors that influence innovation by firms and their...

We develop a graphical 3-equation New Keynesian model for macroeconomic analysis to replace the traditional IS-LM-AS model. The new graphical IS-PC-MR model is a simple version of the one commonly used in central banks and captures the forward-looking thinking engaged in by the policy-maker. We...

Despite massive regional policy efforts, GDP per capita in Southern Italy has only briefly converged on Northern Italian levels (during the 1960s). Failure since then is associated with a policy switch from investment towards income maintenance, with reduced wage sensitivity to regional labour...

The transition in East Germany has been characterized by an extremely rapid privatization of state-owned enterprises and by an equally rapid process of deindustrialization. The great majority of East German SOEs have been privatized and are now genuine capitalist firms with an owner with the...

This paper begins from the twin observation that on the one hand, privatization which leaves control in the hands of the insiders has produced little restructuring while on the other, state-owned enterprises have engaged in some restructuring even in the absence of a clear prospect of...

This paper uses a new data-set to examine how internal capital markets and foreign ownership affect investment. Our data allow us to compare investment behaviour of listed subsidiaries with stand-alone firms while controlling for investment opportunities of parent and subsidiary firms. We...