Q. 1) A puzzling and politically crucial question is why Germany's First World War reconstruction performance was so feeble in comparison with that following the Second World War. The historical importance of this question cannot be understated as it was Germany's persistently low income and high unemployment after the First World War that nourished the rise of fascism. German Economic Growth and its determinants Average Output Contribution of. Growth Capital Labor TIFF 1913-1929 0.6% 0.0% -0.1% 0.7% 1929-1938 3.4% 1.2% 0.5% 1.7% 1950-1960 8.0% 3.8% 0.3% 3.9% 1960-1973 3.5% 2.2% -0.6% 1.9% Source: OECD, Author's calculations Questions 1)What possible explanations could there be for the difference in Germany's economic performance after the two world wars? 2) Look at the chart below. Is it consistent with the model of capital accumulation discussed in class? Note that the dotted line represents Profit Rate, of which magnitudes are on LHS. The smooth line represents Capital Stock Growth rate, of which magnitudes are on RHS. 40 10 % p.a. 30 20 10 - Profit Rate (LHS) Capital Stock Growth (RHS) 951 1954 1957 960 963 966 969 1972 1975 1978 1981 984 987 Profitability and capital accumulation in German Manufacturing Source: Carlin (1996) "West German Growth and Institutions, 1945-90" in Economic Growth in Europe since 1945 Eds. Crafts and Toniolo, CEPR and CUP