Abstract
This paper employs regional data to analyze German money demand before and after reunification. The data show that a cointegrating relationship between real per capita deposits, real per capita income and the short-term interest rate can be found in the Western states, suggesting that reunification has not destabilized monetary relationships within West-Germany. In the Eastern states, the large monetary shock following reunification precludes finding a co-integrating relationship, although in the second half of the 1990s East-German velocity growth seems to have converged to the West-German pattern. The behavior of regional monetary aggregates inside Germany also offers a preview of how in the future monetary aggregates may behave inside Europe's monetary union.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
