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Halting Inflation in Italy and France After World War II


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  • Casella, Alessandra
  • Eichengreen, Barry


In the aftermath of World War II, Italy and France experienced high inflation. The two countries enacted remarkably similar economic policy measures, but stabilization came at different times: for Italy at the end of 1947, and for France a year later. Traditional explanations for the restoration of price stability cannot account for the difference in timing. In this paper, we use this international comparison to shed light on the nature of the inflationary process and on the cause of its decline. We conclude that inflation was symptomatic of an unresolved distributional conflict, and came to an end when one political group, in both countries the Left, accepted its defeat. The Marshall Plan helped to bring the stabilization about by reducing the costs to the group offering concessions. We argue that the French delay can be attributed to differences in the political climate and to the ambitious programme of public investment.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 594.

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Date of creation: Nov 1991
Date of revision:
Handle: RePEc:cpr:ceprdp:594

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Keywords: Distributional Conflict; Marshall Plan; Stabilization;

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  1. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
  2. Albert O. Hirschman & Robert V. Rosa, 1949. "Postwar credit controls in France," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Apr, pages 348-360.
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Cited by:
  1. J. Bradford De Long & Barry Eichengreen, . "The Marshall Plan as a Structural Adjustment Programme," J. Bradford De Long's Working Papers _112, University of California at Berkeley, Economics Department.
  2. Martinez Oliva, Juan Carlos, 2007. "The Italian Stabilization of 1947: Domestic and International Factors," Institute of European Studies, Working Paper Series qt7ng1c97h, Institute of European Studies, UC Berkeley.
  3. Seghezza, Elena & Morelli, Pierluigi, 2014. "Conflict inflation and delayed stabilization," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 171-184.
  4. Philippe, LEDENT & Isabelle, CASSIERS, 2006. "Learning to manage external constraints : Belgian monetary policy during the Bretton Woods era (1944-1971)," Discussion Papers (ECON - Département des Sciences Economiques) 2006032, Université catholique de Louvain, Département des Sciences Economiques.
  5. J. Bradford De Long & Barry Eichengreen, 1991. "The Marshall Plan: History's Most Successful Structural Adjustment Program," NBER Working Papers 3899, National Bureau of Economic Research, Inc.
  6. Martinez Oliva, Juan Carlos, 2005. "The Italian Stabilization of 1947: Domestic and International Factors," MPRA Paper 16396, University Library of Munich, Germany, revised 2007.


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