How Occupied France Financed Its Own Exploitation in World War II
AbstractThe 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%u2019s 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%u2019s burden.
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Date of creation: Apr 2006
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- Eugene N. White & Filippo Occhino & Kim Oosterlinck, 2007. "How Occupied France Financed Its Own Exploitation in World War II," American Economic Review, American Economic Association, vol. 97(2), pages 295-299, May.
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
- N4 - Economic History - - Government, War, Law, International Relations, and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
- NEP-HIS-2006-04-22 (Business, Economic & Financial History)
- NEP-MAC-2006-04-22 (Macroeconomics)
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