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Originally posted by Spanky
Wasn't German monitary policy really tight after the war and didn't they still have high growth? What about the German miracle? Were not Germany and Japan the highest perfornimg economies after the war and they both had the tightest monetary policies?
When Singapore performed its miracle, didn't it have a tight monetary policy? Same with Hong Kong?
Did the Asian Tigers during their massive expansions have rampant inflation?
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I'll try to regurgitate what I remember from that paper; note I was not writing on Japan and don't consider myself particularly knowledgable about Japan, Singapore, China, etc..
This was being written in the early 80s - the German miracle was history and Germany was struggling with the rest of the industrial west. They had a relatively conservative (I don't mean politically conservative, just careful) economic policy that maintained a steady growth level and minimized inflation - it was a keep what you've got policy for the largest economy in Europe. France was playing catch up, and taking a fair bit of monetary risk, and suffering heavy inflation comparatively.
Immediately post-war, Germany was a disaster, and disaster relief came. Whenever a hole is deep, the climb out of it is fairly steep, and with all the Marshall Plan help, it was even steeper. So, the late 40s were a boom, as were the early 50s -- but by a number of measures the German economy was barely getting back to where it was in 1940 in the early 50s. Once Germany gets back to a level commensurate with the rest of the West, they keep going a bit - probably because they have a newer, more efficient industrial plant (very helpful in the automotive industry, for example) than others do. But they never leave France, England or Sweden in the dust.
From a monetary perspective, Bretton Woods overshadowed everything, and the US was dominant in establishing pegged rates - Bonn had virtually no real influence over monetary policy, which was decided for it. The Budesbank had not yet been formed, and its predecessor had vastly less in the way of authority or influence. Comparitive monetary policies became more interesting (and so the divergence of the German and French models more meaningful) in the late fifties and early sixties.
In many ways, the German economic miracle is comparable to that of the US in the mid-to-late 30s -- you see a phenomenal level of growth coming out of the depths of the depression, but its still growing back to the level of the late 20s, at least until the wartime economy roars in.
So, that's the story as I understand it. I'll let you fill me in on Japan.
