The Evolution of Output in Transition Economies: Explaining the Differences
May 1, 1999
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Summary
What are the relative roles of macroeconomic variables, structural policies, and initial conditions in explaining the time path of output in transition and the large observed differences in output performance across transition economies? Using a sample of 26 countries, this paper follows a general-to-specific modeling approach that allows for differential effects of policies and initial conditions on the private and state sectors and for time-dependent effects of initial conditions. While showing some fragility to model specification, the results point to the preeminence of structural reforms over both initial conditions and macroeconomic variables in explaining cross-country differences in performance and the timing of the recovery.
Subject: Economic sectors, Fiscal policy, Fiscal stance, Inflation, Macrostructural analysis, Prices, Production, Production growth, Public sector, Structural reforms
Keywords: Baltics, BRO country, Central and Eastern Europe, country dummy, data set, Eastern Europe, effects of policy, Fiscal stance, growth, growth model, Inflation, initial condition, macro policy, macroeconomic variable, model gB, models gA, output decline, policy indices, policy variable, private sector, private sector effect, Production growth, Public sector, recovery, regression model, structural reforms, transition economies, WP
Pages:
81
Volume:
1999
DOI:
Issue:
073
Series:
Working Paper No. 1999/073
Stock No:
WPIEA0731999
ISBN:
9781451849448
ISSN:
1018-5941
