IMF Staff Papers, Volume 48, Special Issue, Transition Economies, How Much Progress?

IMF Staff Papers, April 25, 2002

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Collection of eight papers focused on different aspects of the first 10 years of economic transition.
Examines the transformation of centrally planned economies into market-based systems and the intellectual, practical, and policy challenges encountered.

Controversies addressed in the collection:
- The speed of reforms.
- Privatization methods.
- The role and organization of government.
- The kind of financial system needed.
Many controversies were ideological but also reflected the initial ignorance and unpreparedness of the economics profession with respect to large-scale systemic transformation.

Resident representatives in transforming economies had a unique opportunity to witness and participate in the transformation.
The transition process is characterized as intellectually fascinating, frequently rewarding, occasionally frustrating, and never boring.

The decline in cash revenue in Russia is identified as the key macroeconomic policy failure of the transition.
Central argument regarding the Russian case:
- The fall in cash compliance emerged when money printing was replaced with a method of budget financing that, in the short run, did not compromise the government's goals of low inflation, a stable exchange rate, and low interest rates.
- That budget-financing approach ultimately led the government into a low cash revenue trap.

Subject: Balance of payments, Currencies, Economic sectors, Foreign direct investment, Inflation, Money, Portfolio investment, Prices, Privatization
Keywords: Baltics, cash revenue, Central and Eastern Europe, Central Asia and the Caucasus, CIS country, Currencies, East Asia, Europe, firm, Foreign direct investment, Inflation, investment, market economy, Portfolio investment, Privatization, SP, state firm, transition economy