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The fundamental difference between the context in Eastern Europe and in post-war Germany was the supply side: in West Germany, a recovery of production had already taken place following the collapse at the end of the war and businesses had owners and managers in place. A rapid supply side response to the removal of distortions in the economy could have been expected. Even under such favourable conditions, a further round of macroeconomic stabilization was implemented in 1949 as inflationary pressure re-emerged.

125-55. Holmes, M. (1985) The First Thatcher Government, 1979-1983, Brighton: Wheatsheaf. The British Economy 23 Johnson, P. and Webb, S. (1993) 'Explaining the Growth in UK Income Inequality, 1979-1988', Economic Journal, Vol. 103, pp. 429-35. Koedijk, K. and Kremers, J. (1996) 'Market Opening, Regulation and Growth in Europe', Economic Policy, Vol. 23, pp. 445--67. Kormendi, R. C. and Meguire, P. C. (1985) 'Macroeconomic Determinants of Growth', Journal of Monetary Economics, Vol. 16, pp. 141-63.

Common to many other European countries, growth in the 1960s was still very high by historical standards, with both high investment and catch-up effects playing an important role. In this period, Germany benefited from demand buoyancy as an external effect of the strong growth of its markets, especially in Europe. Modernization of the French and Italian economies called for new capital equipment and this was largely supplied by Germany. Until the late 1960s, the government did not use Keynesian policies to boost aggregate demand: it was not necessary.

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