Stylized features of economic growth after World War II

Abstract

Following the World War II, the advanced capitalist world, in Europe and North America, has evolved through three stages of development. The 1950s and 1960s saw unprecedented economic growth rates that can only partially be explained by post-war recovery, but was principally the result of demand management and a redistributive approach to fiscal policy that kept employment high and tended to equalize incomes. However, in the second stage, economic development slowed down to varying degrees in different countries as policies of demand management and redistribution were abandoned in favor of the market liberalization especially in the labor market. This led to high unemployment, growing economic inequality, and economic stagnation, eventually giving rise to growing indebtedness, culminating in the financial crisis of 2008. The third stage began with the financial crisis in 2008. In Europe, governments were forced to abandon counter-cyclical policies in favor of fiscal and trade balance.