THE KOREABOOM IN WEST-GERMANY - FACT OR FICTION

In some accounts the West German miracle was faltering in I950; it was rescued by an exogenous positive demand shock coming from the Korean War. But the 'Koreaboom' in West Germany never took place. Instead, th e Korean War generated problems for the West German economy. A combina tion of more imports and higher import prices led to the loss of West German foreign reserves, precipitating a balance-of-payments crisis, w hich tested the postwar relations between victors and vanquished. The European Payments Union kept the postwar European economy away from th e discontinuities and adverse changes that characterized interwar econ omy.