{
  "title": "Liberalization and the Behavior of Output During the Transition From Plan to Market",
  "publication": "IMF Working Papers, April 1, 1997",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/liberalization-and-the-behavior-of-output-during-the-transition-from-plan-to-market-2175",
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  "summary": "This paper deals with liberalization and the evolution of output during the transition from plan to market. It explains why strong liberalization leads to a comparatively steep fall in output early in the transition, but a relatively strong recovery later on.",
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    {
      "heading": "Summary and main finding",
      "content": "- The paper examines liberalization and the evolution of output during the transition from plan to market.\n- Strong liberalization leads to a comparatively steep fall in output early in the transition, but a relatively strong recovery later on.\n- Liberalization initially causes transitional unemployment of capital and contraction of the old enterprise sector because it takes time to restructure the capital stock inherited from the old system.\n- By making room quickly for new, more efficient enterprises, liberalization sets the stage for recovery and a much higher level of income in the medium term."
    },
    {
      "heading": "Mechanism and role of capital restructuring",
      "content": "- Transitional unemployment of capital arises because existing capital stock is structured for the old system and cannot be reallocated instantaneously.\n- The contraction of the old enterprise sector follows rapid liberalization as market forces reallocate resources away from inefficient firms.\n- Rapid liberalization accelerates the entry and expansion of new, more efficient enterprises, enabling a stronger medium-term recovery in output."
    },
    {
      "heading": "Scope, subjects, and keywords",
      "content": "- Subject areas: Consumption, Inflation, National accounts, Prices, Production, Production growth.\n- Keywords: Baltics, Central and Eastern Europe, Consumption, Inflation, Liberalization, liberalization effort, liberalization index, liberalization process, liberalization variable, Output, Production growth, real GDP, Transition, type-B firm, WP.\n\n---\n\n Content in this bundle\n\n- wp9753\n  - wp9753 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp9753 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/liberalization-and-the-behavior-of-output-during-the-transition-from-plan-to-market-2175"
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    "[Markdown version](/en/publications/wp/issues/2016/12/30/liberalization-and-the-behavior-of-output-during-the-transition-from-plan-to-market-2175/index.md)",
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    "Authors: Ernesto Hernández-Catá",
    "Published: April 1, 1997",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451969979.001",
    "The paper examines liberalization and the evolution of output during the transition from plan to market.",
    "Strong liberalization leads to a comparatively steep fall in output early in the transition, but a relatively strong recovery later on.",
    "Liberalization initially causes transitional unemployment of capital and contraction of the old enterprise sector because it takes time to restructure the capital stock inherited from the old system.",
    "By making room quickly for new, more efficient enterprises, liberalization sets the stage for recovery and a much higher level of income in the medium term.",
    "Transitional unemployment of capital arises because existing capital stock is structured for the old system and cannot be reallocated instantaneously.",
    "The contraction of the old enterprise sector follows rapid liberalization as market forces reallocate resources away from inefficient firms.",
    "Rapid liberalization accelerates the entry and expansion of new, more efficient enterprises, enabling a stronger medium-term recovery in output.",
    "Subject areas: Consumption, Inflation, National accounts, Prices, Production, Production growth.",
    "Keywords: Baltics, Central and Eastern Europe, Consumption, Inflation, Liberalization, liberalization effort, liberalization index, liberalization process, liberalization variable, Output, Production growth, real GDP, Transition, type-B firm, WP.",
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