Working Paper: NBER ID: w3899
Authors: J. Bradford De Long; Barry Eichengreen
Abstract: The post-World War II reconstruction of Western Europe was one of the greatest economic policy and foreign policy successes of this century. "Folk wisdom" assigns a major role in successful reconstruction to the Marshall Plan: the program that transferred some $13 billion to Europe in the years 1948-51. We examine the economic effects of the Marshall Plan, and find that it was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. We argue, however, that the Marshall Plan did play a major role in setting the stage for post-World War II Western Europe's rapid growth. The conditions attached to Marshall Plan aid pushed European political economy in a direction that left its post World War II "mixed economies" with more "market" and less "controls" in the mix.
Keywords: Marshall Plan; economic recovery; post-World War II; Eastern Europe; structural adjustment
JEL Codes: N10; N40; F50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Marshall Plan (F35) | shift in political economy towards more market-oriented policies (P16) |
| Marshall Plan (F35) | reductions in government controls (H19) |
| Marshall Plan (F35) | restoration of price stability (E64) |
| Marshall Plan (F35) | opening of economies to trade (F43) |
| shift in political economy towards more market-oriented policies (P16) | economic recovery (E65) |
| reductions in government controls (H19) | economic recovery (E65) |
| restoration of price stability (E64) | economic recovery (E65) |
| opening of economies to trade (F43) | economic recovery (E65) |