DP638 The Marshall Plan: Economic Effects and Implications for Eastern Europe and the Former USSR

Author(s): Barry Eichengreen, Marc Uzan
Publication Date: March 1992
Keyword(s): Eastern Europe, Foreign Aid, Marshall Plan
JEL(s): F31, N14, O22
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=638

This paper is a first attempt to evaluate the economic effects of the Marshall Plan. We find that US aid had a significant impact on Europe's recovery from World War II. The recipients of large amounts of Marshall aid recovered significantly faster than other industrial countries. Strikingly, however, we find that the obvious channels through which the Marshall Plan could have affected European recovery - stimulating investment, augmenting capacity to import and financing infrastructure repair - were relatively unimportant. Rather, the crucial role of the Marshall Plan was to facilitate the restoration of financial stability and the liberalization of production and prices.