How Occupied France Financed its Own Exploitation in World War Ii

55 Pages Posted: 18 May 2006 Last revised: 1 Sep 2010

See all articles by Filippo Occhino

Filippo Occhino

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Eugene N. White

Rutgers University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 2006

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%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.

Suggested Citation

Occhino, Filippo and Oosterlinck, Kim and White, Eugene Nelson, How Occupied France Financed its Own Exploitation in World War Ii (April 2006). NBER Working Paper No. w12137. Available at SSRN: https://ssrn.com/abstract=896210

Filippo Occhino

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

Eugene Nelson White (Contact Author)

Rutgers University - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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