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How Much Can a Victor Force the Vanquished to Pay? France under the Nazi Boot

Published online by Cambridge University Press:  01 March 2008

FILIPPO OCCHINO ,
KIM OOSTERLINCK  and
EUGENE N. WHITE
FILIPPO OCCHINO
Affiliation:
Assistant Professor of Economics, Department of Economics, Rutgers University, New Brunswick, New Jersey 08901. E-mail: [email protected].
KIM OOSTERLINCK
Affiliation:
Assistant Professor, Solvay Business School, Université Libre de Bruxelles, 1050 Bruxelles, Belgium. E-mail: [email protected].
EUGENE N. WHITE
Affiliation:
Professor of Economics, Department of Economics, Rutgers University, New Brunswick, New Jersey 08901, and Research Associate, NBER. E-mail: [email protected].
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Abstract

Occupation charges paid by France to Nazi Germany represent one of the largest international transfers and contributed significantly to the German war effort. We employ a neoclassical growth model that incorporates essential features of the occupied economy to assess the welfare costs of the policies that managed the payments to Germany. Our lower bound estimates show that occupation payments required a severe cut in consumption. A draft of labor to Germany and a reduction of real wages added to this burden. Management of the accumulated domestic debt required large budget surpluses; but post-Liberation inflation slashed the real debt.

“Ils ne nous ont rien enlevé de vive force; ils ont toujours tout acheté correctement; mais ils nous ont tout payé avec de l'argent qu'ils nous avaient volé.”1

Type
ARTICLES
Information
The Journal of Economic History , Volume 68 , Issue 1 , March 2008 , pp. 1 - 45
Copyright
Copyright © The Economic History Association 2008

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