1. The Cost of Remoteness: Evidence from German Division and Reunification Stephen J. Redding, Daniel M. Strum Comments by Josep M. Vilarrubia Banco de España

2. General Comment This paper has one major … …critical … …flaw Footnote 36 reads “The estimated coefficient (standard error) are 5.168” I believe it should read “The estimated coefficient (standard error) is 5.168”

3. What I really mean to say is … Very good idea Excellent execution

4. Basic Idea Endogeneity in the geographical distribution of income and activity Natural experiment: Iron curtain (and its fall) Cities located close to the center of an integrated Germany suddenly find themselves further away from centers of economic activity Did this loss of market access have an impact on these cities subsequent size/growth?

5. Is this a good Natural Experiment? Could other factors that could account for this? Yes Institutions Not a problem. They are common Natural Resources Not a problem. They are largely unchanged

6. Answer Does this loss of market access account for these cities’ subsequent size/growth? Yes. About 0,75% slower population growth. (Implied decline of 1/3 in city size)

7. Model Standard New Economic Geography Model Uses Armington assumption (even if it is not stated) What would be the implications of removing it? Petals Fugals Home market effect (IRS + Transportation Costs) Competition effect Cost of living effect (Supplier access) Congestion effect (Non-traded good H c ; Ammenities?)

8. Market Potential as a proxy for MA Market Potential provides convincing results but.. … shouldn’t this be the main result of the paper? (Deserves more attention in the paper)

9. Robustness Checks City size provides convincing results but … … aren’t also big cities better protected/more prepared? Demography provides convincing results, no buts City structure is used in a matching estimation but it has more potential (information in relative city shares to national shares and industry tendencies?)

10. More Robustness Checks War Devastation. Similar proxies as in Davis & Weinstein are available Western Integration provides convincing evidence

11. Multiple Equilibria? Temporary vs Permanent Shocks Davis & Weinstein (2002) Redding & Sturm (2006) ShockWWII (Bombings)WWII (Iron curtain) Type of ShockTemporary (?)Permanent (?) EffectsOnly temporary??

12. Question As a result of the division, have border cities transitioned to a new equilibrium? In other words, will border cities rebound to their pre-division levels? It seems Steve and Daniel are already working on this