Nazi economic imperialism and the exploitation of the small: evidence from Germany’s secret foreign exchange balances, 1938‐1940

This article re‐examines the hypothesis of Hirschman and Child that Nazi trade policy before the Second World War exploited the smaller European countries. Archival evidence on foreign exchange balances for 1938‐40 shows that trade policies alone had only a small effect. Earlier dependence of south‐eastern Europe on Germany was caused partly by the collapse of south‐east European trade with the Soviet Union. Adjusted figures reveal a regional pattern similar to that of 1913. Generally, exploitation began with military occupation, but was then on a massive scale. Results again confirm Milward's findings on the westward orientation of the German war economy.     

Deficit Spending in the Nazi Recovery, 1933–1938: A Critical Reassessment

This paper examines the effects of deficit spending and work-creation on the Nazi recovery, employing archival data on the public deficit and modern time series techniques. Although deficit spending was tried and full employment was reached within four years, the fiscal impulse generated by the deficits does not appear to have driven the speed of recovery. VAR forecasts of output using fiscal and monetary policy instruments suggest only a minor role for active policy during the recovery. Nazi policies deliberately crowded out private demand to ensure high rates of rearmament. Military spending dominated civilian work-creation already in 1934. Investment in autobahn construction was minimal during the recovery and gained momentum only in 1936 when full employment was approaching. Continued fiscal and monetary expansion after that date may have prevented the economy from sliding back into recession. We find some effects of the Four Years Plan of late 1936, which boosted government deficits further and tightened public control over the economy. J. Japan. Int. Econ., December 2002, 16(4), pp. 559–582. School of Business and Economics, Humboldt University of Berlin, Spandauer Strasse 1, D-10178 Berlin, Germany; and CEPR. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: N44, N14, E52, E47, E65, E27.     

Understanding West German economic growth in the 1950s

We evaluate explanations for why Germany grew so quickly in the 1950s. The recent literature has emphasized convergence, structural change and institutional shake-up while minimizing the importance of the postwar shock. We show that this shock and its consequences were more important than neoclassical convergence and structural change in explaining the rapid growth of the West German economy in the 1950s. We find little support for the hypothesis of institutional shakeup. This suggests a different interpretation of post-World War II German economic growth than features in much of the literature.

CURRENCY VERSUS BANKING IN THE FINANCIAL CRISIS OF 1931

During the 1920s, Germany was the world's largest capital importer, financing reparations through U.S. credits. We examine financial channels in crisis transmission between these two countries around the German financial crisis of 1931. We specify a structural dynamic factor model to identify financial and monetary factors separately for each of the two economies. We find substantial crisis transmission from Germany to the United States via the financial channel, while monetary or financial crisis transmission from the United States to Germany was weak. We also find major real effects of the 1931 crisis on both economies, again transmitted via the financial channel.