Week 6 - Post-War growth, European Golden Age

Question 1

What were the important settings before the European Golden Age?

Answer 1

Europe was devastated after end of WWII in 1945
- Physical destruction
- GDP fell as wartime production shifted away from consumer goods
- Trade collapsed
- Basic goods were scarce

• this created a low starting point that allowed for catch up growth

Question 2

What are some economic facts of the Marshall plan

Answer 2

Eichengreen et al (1992)
- 130 billion dollars worth of Aid to Europe
- Averaged 2.5% of Recipents GDP

Question 3

For Eichengreen et al (1992)

Answer 3

• Focus - What was the true impact of Marshall plan of European economies from 1948-1951.
• Research design
• Historical case studies
• Quantitative regression b
• Uses 3 gap simulation model

Question 4

What papers speak about the Marshall Plan?

Answer 4

Eichengreen (1992)
Crafts (2013)
Bianchi and Giorcelli (2023)

Question 5

What are the required readings for European Golden Age?

Answer 5

Eichengreen and Uzyn (1992) - coordination failure
Temin (2002) - disequilibrium

Question 6

For Temin (2002)
Research Focus
Research Design
Results
Interpretation

Question 7

For Eichengreen (1996) - mobilising capital
Research Focus
Research Design
Results
Interpretation

Question 8

Crafts and Toniolo (1996)

Answer 8

🎯 Focus:
To review Europe’s economic growth since 1945 in a long-run perspective.

To highlight the uniqueness of the 1950–73 “Golden Age” and contrast it with post-1973 performance.

To introduce key themes: convergence, productivity, reconstruction, and institutional change.

📈 Main Results:
Golden Age (1950–73) was historically exceptional: very high GDP and productivity growth, with strong employment and convergence.

Growth was driven by productivity (TFP), catch-up dynamics, and reconstruction — not just capital accumulation.

Almost all countries shared in growth, regardless of national differences.

Post-1973 growth slowed, but aligned more closely with long-term historical trends (not a collapse).

The chapter lays a descriptive foundation, rather than offering a bold explanatory theory.

Question 9

For Crafts (2013)

Question 10

For Eichengreen (1996) - institutions

Question 11

For Irwin (1995)

Answer 11

Focus: Looks at the impact of GATT on the European Golden Age

Research design:
- Uses counterfactual and archives from the negotiations.

Result:
✅ 1. GATT’s direct impact was modest in the short term
Early European participation in GATT did not lead to major liberalization immediately.

Many countries kept quotas and trade restrictions for balance-of-payments reasons.

The 1947 Geneva Round produced limited European tariff cuts.

✅ 2. U.S. bilateral pressure and Marshall Aid mattered more initially
The U.S. used the Marshall Plan to pressure Europe to open markets.

Institutions like the European Payments Union (EPU) were more effective than GATT in increasing trade in the early 1950s.

✅ 3. GATT’s long-term value was institutional
GATT provided:

A legal framework for reciprocal trade liberalization

A commitment mechanism to prevent protectionist backsliding

A forum for future negotiations (e.g. Kennedy Round in the 1960s)

Interpretation: While the GATT did not drive the Golden Age it set the institutional framnework for later growth.