New Economic Geography and Reunified Germany at Twenty: A Fruitful Match?

Authors

• Bickenbach
• F.
• Bode
• E.

Publication Date

DOI

10.1080/17421772.2012.760132

JEL Classification

Key Words

Related Topics

We qualitatively match new economic geography (NEG) to stylized facts on German economic integration after 1989. We find that NEG may explain German integration reasonably well. Germany may currently be close to the peak of the bell curve, which describes the long-run relationship between integration and agglomeration in Germany. As a consequence, further economic integration between the two parts of Germany may eventually foster redispersion of economic activity toward East Germany. We also identify limitations of NEG for explaining German integration, most notably the analytical complexity of multi-region models and its neglect of knowledge spillovers and labor pooling.

Kiel Institute Experts