Karl-Heinz Laube  / pixelio.de (Copyright)  Waehrungsunion D-Mark DDR
Interview, 01 Jul 2015

Professor Fratzscher, German monetary union came into force 25 years ago on July 1, 1990. On the same day, capital controls in Europe were removed, laying the foundations for a European monetary union and the euro. What lessons can Europe learn from the German monetary union?In 1990, there was... more

puje (Copyright)  Diagramm Statistik Aufschwung
Press Release, 25 Jun 2015

GDP is set to grow by 1.8 percent this year and 1.9 percent next year – the global economy is slowly picking up steam, and the euro area is showing solid growth performance – possible risks such as Greece leaving the euro area are creating a strain on the economy The German economy is... more

Dewing (Copyright)  Rolltreppe Fahrtreppe Rolltreppen
Interview, 25 Jun 2015

Dr. Fichtner, will the German economy perform as well in the second half of 2015 as it did in the first half of the year? We assume that the German economy will lose some of its momentum. One-off effects such as plummeting oil prices played a major role in the strong gains made during the winter... more

Rudolf  Schmidt (Copyright)  Geld Cash Finanzen
Press Release, 19 Jun 2015

DIW Berlin’s researchers warn: employment does not necessarily prevent poverty—11.5 million people in Germany are at risk of poverty—one in five in eastern Germany is living below the poverty risk threshold  Real disposable household incomes in Germany rose by an average of... more

martini (Copyright)  Lohnsteuerkarte Farbbild Farbfoto
Interview, 19 Jun 2015

Dr. Grabka, you have analyzed income inequality in Germany. Does your research show that the gap between rich and poor has widened even further?If we look at the development of income inequality since 2000, it is clear that the gap between the richer and the poorer income groups has widened further.... more

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by Marcel Fratzscher, in DIW Economic Bulletin

Precisely 25 years ago, on July 1, 1990, German monetary union came into force. On the same day, capital controls in Europe were abolished, creating the basis for European monetary union and the euro. These two historical events fundamentally changed Germany and the rest of Europe. Both German and European monetary union were and still are being heavily criticized and debated. Was the design of German monetary union wrong? Was it a mistake to adopt the euro? Particularly in terms of finding a solution to the current European crisis, it is important to understand what lessons Europe can take from German monetary union.

by Karl Brenke, in DIW Economic Bulletin

Twenty-five years ago, East Germany adopted the deutschmark as its currency. In terms of East German economic development, monetary union proved to be a disaster. With virtually no warning, East Germany’s few productive factories and businesses were exposed to free market competition; industrial production collapsed in a way unparalleled in history. Nevertheless, for political reasons, introducing monetary union at the start of the process of system transformation was almost unavoidable. Given the insecure foreign policy situation, the aim was to seize the chance of reunification and push through monetary union to create an irreversible fait accompli. Moreover, this move was intended to put a brake on the massive exodus of people from East Germany. Admittedly, it also buttressed the widespread illusion among the East German population that a strong currency would facilitate fast-track income parity on West German levels. This illusion, however, also encouraged excessive wage hikes which only served to intensify the shock of alignment in summer 1990, complicate economic renewal in eastern Germany, and increase the financial costs.

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