This paper advances the hypothesis that the EUS crisis was caused by German unification. The unification has implied a massive resource demand which parallels the US resource demand following Reagan's tax reforms in the eighties. The resource demand revised the German interest rates relative to the rest of the world which brought about devaluations of other European currencies. The paper identifies those European currencies which currently are undervalued.
*Published:
The Economics of Globalization. Razin, A., and E. Sadka, eds., Cambridge: Cambridge University Press, 1999, pp. 33-58.
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