T he econom ic growth o f West G erm any between 1945 and the early 1970s was outstanding. It was the period o f the so-called econom ic m iracle, because the public, after a ra th e r gloomy outlook in the second half o f the forties, was m uch surprised by the quick rise in welfare and living standards. T he index o f real weekly wages in industry (1962 = 100), for exam ple, rose from 40 to 54 between 1925 and 1939, an increase o f 2.2 p er cen t per annum . From 1950 onwards, however, real wages grew by m ore than 5 p er cen t on annual average from an index level o f 53 to 145 in 1970.1

T he period before the First W orld W ar showed a steady tren d o f growth with an average annual rate o f 1.5 per cent, and, at least from the 1890s on, a norm al pattern o f the trade cycle, i.e. a pa tte rn in which o u tp u t fluctuated m oderately aro u n d its long-term trend . In contrast, the inter-war years were characterized by a heavily fluctuating growth trend with an irregular deep downswing in the G reat D epression o f the early thirties, after real p ro d u c t p e r head had only ju s t re­ covered to its pre-war level, and a ra th e r artificial boom in the Nazi period fuelled by state dem and with hardly any rise in the living standards o f the population. T he tim e after the Second W orld War, on the o th er hand , saw a very steep, albeit flatten ing trend o f growth. Its average annual rate betw een 1948 and 1973 was abou t 6.5 p er cent. T here was a long period with no t a single year o f negative growth, implying that the norm al trade cycle had disappeared. However, after 1973 the situation becam e again com parable to the decades before 1914. The tren d o f growth was m ore o r less linear, the average rate until 1995 was 1.6 per cen t and thus m uch lower than in the p reced ing period, and the norm al trade cycle recurred , including years o f recession. Thus, Figure 18.1 suggests an in ter­ p re ta tion that distinguishes four periods o f growth in G erm any during the last one and a half centuries: two o f a norm al growth pattern , nam ely the tim e before 1914 and after 1973, and two o f an exceptional pattern , i.e. the inter-war years and the period after the Second W orld W ar until abou t 1973.