OECD's annual survey of the German economy. Part I reviews economic developments in the two parts of Germany since reunification, seeking to identify the reasons why the integration process has been more disruptive and costly than widely thought at the outset. Part II discusses the difficult balancing of policies which has been called for by these developments. Part III presents projections until 1993, assessing both the prospects for a quick return to a path of price disinflation and budget consolidation and, for the eastern German economy, the chance of being put on a self sustainable course of catching up with the western Lander. Given the central role of wage developments for both cyclical developments in the west and for the speed and nature of the structural adjustment in the east, Part IV focuses on institutional and behavioral features of the labour market, with a view to gaining a better understanding of current wage determining mechanisms. A summary of the key points of the survey is provided in the conclusions, which also offer some policy recommendations.
