Comments On: Macroeconomic Aspects of German Unification

Abstract

Hans-Werner Sinn’s interesting paper cuts into the major issues of the absorption of East Germany into a common economic venture. It appropriately addresses the question of monetary reform, capital requirements, labor market issues and the modality of privatization.¹ It thus adds to the first flow of speculation of what lies ahead. Should we think of East Germany as the land of Zeiss and Junkers, with potential for high value added work and high wages, or as an area devastated by the productivity-eroding influence of 50 years of mindless, hard communism? There is plenty of history to say that the region once was in the forefront (like Rome, Athens and Bogota), but there is also the Trabant to remind us that something went badly wrong. Sinn rightly leaves no doubt, any numbers we might make must be highly speculative because for the time being so little is known about the facts and even less about their economic interpretation.