Developments After the Second World War

The Second World War had significant and lasting economic consequences for both the European countries directly affected and the United States. As the victorious power, the United States shared responsibility for the political and economic reconstruction of Western Europe. The countries of Eastern Europe came under the control of the victorious Soviet Union, and planned economies were introduced, with parliaments dominated by the respective communist parties. In Western Europe, Keynesian global macroeconomic policies came to the fore, but the first and second oil-price shocks of the 1970s and 1980s gave rise to inflation, which was subsequently addressed through the implementation of diverse supply-side economic policies and monetarism. The chapter also delves into the emergence of novel theoretical perspectives on economic growth.