Who is Still Haunted by the Specter of Communism? Explaining Relative Output Contractions Under Transition

Author/Editor:

Katrin Elborgh-Woytek ; Julian Berengaut

Publication Date:

April 1, 2005

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper analyzes the initial output decline in transition economies by estimating a crosssection model stressing two major factors-conflicts and the legacies of the Soviet period. We link the Soviet legacies in place at the outset of the transition to the subsequent path for the development of market-related institutions. Institutional development (as proxied by measures of corruption) is used as an intermediate variable. An instrumental variable approach is followed to derive estimates that are not biased by the possible endogeneity of corruption with respect to output developments. Assuming that the extent of Soviet legacies was positively correlated with the length of the communist rule allows us to use the years under the Soviet regime as an instrument.

Series:

Working Paper No. 05/68

Subject:

Frequency:

Annually

English

Publication Date:

April 1, 2005

ISBN/ISSN:

9781451860870/1018-5941

Stock No:

WPIEA2005068

Format:

Paper

Pages:

22

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