Working Paper: NBER ID: w12137
Authors: Filippo Occhino; Kim Oosterlinck; Eugene N. White
Abstract: The occupation payments made by France to Nazi Germany between 1940 and 1944 represent one of the largest recorded international transfers and contributed significantly to financing the overall German war effort. Using a neoclassical growth model that incorporates essential features of the occupied economy and the postwar stabilization, we assess the welfare costs of French policies that funded payments to Germany. Occupation payments required a 16 percent reduction of consumption for twenty years, with the draft of labor to Germany and wage and price controls adding substantially to this burden. Vichy's postwar debt overhang would have demanded large budget surpluses; but inflation, which erupted after Liberation, reduced the debt well below its steady state level and redistributed the adjustment costs. The Marshall Plan played only a minor direct role, and international credits helped to substantially lower the nation's burden.
Keywords: No keywords provided
JEL Codes: E1; E6; N1; N4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| occupation payments (J33) | reduction in consumption (D12) |
| occupation payments (J33) | inflationary pressures post-liberation (P22) |
| labor drafts to Germany (J89) | exacerbation of economic burden (H69) |
| wage and price controls (E64) | exacerbation of economic burden (H69) |
| reduction in consumption (D12) | economic implications post-liberation (F54) |
| Marshall Plan (F35) | alleviating financial burden (I22) |