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... Since higher interest rates are believed to reduce investment, and because investment is necessary for long-run economic growth, proponents of this view (sometimes '[ called "deficit hawks") assert that avoiding deficits should be the primary goal of fiscal\\\:.I!, policy (Mitchell,2005). Hernandez-Cata (2005) argues that fiscal restraint is a broadly ',I • accepted objective of policy, and deficit ceilings are the most common tool for implementing restraint. Among the reasons for fiscal prudence is the concern that deficits would crowd out private investment and net exports, and that it would increase the govemment debt or to a level were inflationary financing, arrears and ultimately default would become a serious preoccupation. ...
This study examined the effectiveness of deficit financing on the level of unemployment in Nigeria ranging from 1980-2009. Three null hypotheses guided the study. Time series data was collected and the linear regression of the ordinary least squares (OLS) was employed in estimating the parameters of the variables From the results, Nigeria has the prospects of reducing the level of unemployment if the manipulating variables are used judiciously. Decrease in exports, investment and wages are also recommended to increase unemployment. Federal government deficit financing should be judiciously targeted towards projects that will minimize the rate of unemployment in Nigeria. Other recommendations include formulation of monetary policies targeted towards minimizing the rate of inflation, creating a favorable environment to attract foreign direct investment.
... Arguing against this idea that reforms could be introduced in isolation, Balcerowicz ( 1995 ) postulated the idea of "indivisibility of reforms" in the road to institutional change, in that the reforms needed to be done in one fell swoop or else they would continue to be plagued by the behavior of existing political institutions; moreover, in addition to political interference in the economic institution-building process, there might be a package of reforms that needed to be introduced concurrently in order to work, where each process separately might fail. This approach was given some empirical backing by Hernandez-Cata ( 1997 ), who demonstrated that a certain threshold level of liberalization needed to be achieved to reap the benefits of the market reforms. ...
The fundamental question regarding the NIE literature and its application to transition economics is also the simplest: What exactly is an “institution?” As Geoffrey Hodgson astutely pointed out, “it is not possible to carry out any empirical or theoretical analysis of how institutions … work without having some adequate conception of what an institution … is” (Hodgson 2006: 1). While there is a well-developed philosophical literature attempting to tackle this issue (North 1990, Hodgson 2006, and Voigt 2009a bracket the debate), for the most part the empirical literature has avoided the question; thus, lack of a precise definition of this central term has led to difficulties econometrically, with the concept of “institutions” being defined by the model and the data, rather than a concrete conception of “institutions” defining the model. Indeed, the current muddled view of “institutions” has led to empirical investigations encompassing all manner of “institutions” across all spheres: as recent research by Stefan Voigt (2009) noted, “in the literature, newspapers, supermarkets, and even phone booths have been described as institutions” (Voigt 2009a: 2).
... We assume that despite their effort, workers (entrepreneurs) occasionally fail to acquire skills (business opportunities).5 Capital is excluded from the production function on the assumption that the stock of capital in the planned economy is either obsolete or not mobile during the transition(Hernández-Catá, 1997). Nonetheless, the results carry through when capital is added. ...
... Geçiş ekonomilerinde üretim ve büyüme düzeylerindeki farklılıklar dikkat çeken çeşitli çalışmalar vardır. Hernandez-Cata, 1997;Havrylysyhyn, Izvorski ve Rodeon, 1998 genellikle U şeklindeki geçiş dönemi büyüme yapısı ve ülke grupları arasındaki büyüme farklılıkları üzerinde yoğunlaşmıştır. U şeklindeki büyüme yolu genellikle geçiş dönemi büyüme dinamiklerine bağlanırken, ülkeler arasındaki farklılıkların nedeni başlangıç koşulları, geçiş stratejileri, dış yardım, doğrudan yabancı sermaye girişi, doğal kaynak zenginliği, komünist rejim altında geçen yıl sayısı, geçiş öncesi borçluluk durumu, üretimin sektörel dagılımı ve tarım-sanayi sektörlerinin başlangıçtaki rolleri ve reform seviyelerine bağlanmaktadır. ...
Çukurova ve Kirgiz-Türk Manas Üniversitesi, İ.İ.B.F. İktisat Bölümü 1. Giriş 1990'li yillarla birlikte iktisat literatürüne giren bir kavram olarak "Geçiş Ekonomileri" üzeri araştirmalar giderek artarken, bu ekonomilerin makro ekonomik performanslari arasi farkliliklarin araştirilmasi son yillarla birlikte özel bir ilgi sahasi haline gelmiştir. Başlangiçta geçiş sürecinin sorunlari ve piyasa ekonomisine dönüşüm için yapilmasi gereken reformlar üzerine yoğunlaşan çalişmalar da bu çerçevede son yillarla birlikte sözkonusu ülkelerin büyüme performanslari arasi farkliliklarin nedenleri üzerinde yoğunlaşma göstermeye başlamiştir. Gerçektende geçiş ekonomileri büyüme trendleri arasinda önemli farkliliklar vardir. Bu durumun sebepleri kuşkusuz pek çoktur. Ancak, bunlar arasinda bazi faktörler ön plana çikarilmaktadir. Çalişmamiz farkliliklarin boyutlarini irdelemekte ve buna neden olan faktörlerden diş finansmanlarin rolünü analiz etmekte olup, büyüme farkliliklarinin gerisindeki önemli bir faktör olarak diş finansmanlarin seviyesi, içeriği ve diş finansman akişlarinin geçiş ekonomileri arasi farklilaşmasinin nedenlerini sorgulamaktadir.
... Por otra parte, la situación de partida (que era claramente más avanzada en Hungría y, en menor medida, en Polonia), así como el retraso en la introducción de programas de estabilización -y su carácter más o menos gradual-, también parecen explicar las diferencias de crecimiento entre países[Fischer et al. (1996)]. Los anteriores estudios también subrayan la importancia de las reformas estructurales para aumentar el crecimiento potencial de una economía, incluso admitiendo que las reformas liberalizadoras pueden tener efectos negativos inicialmente, como quedó patente en las grandes pérdidas de capacidad industrial en ciertos países, antes de rendir beneficios posteriormente[Hernández-Cata (1997)]. Por último, las reformas institucionales, que incluyen la introducción de sistemas democráticos, un elevado grado de estabilidad política, un clima de gestión empresarial adecuado, un bajo grado de corrupción y una eficiente aplicación de las leyes, son factores que generalmente están altamente correlacionados con la convergencia real, aunque es difícil determinar cuál es la relación de causa-efecto[de Melo et al. (1997)].Adicionalmente, la intensificación en el proceso de integración con la UE, como queda reflejado en la mayor apertura y la reorientación comercial y financiera, ha estimulado la adopción de nuevas y mejores tecnologías, debido a las necesidades de importar bienes de inversión, y ha promovido una diversificación eficiente de la producción y una mejor asignación de recursos. ...
La ampliación hacia el este de la Unión Europea (UE) contempla actualmente la incorporación a medio plazo de hasta trece países. Por un lado, los diez países de Europa central y oriental, con economías inmersas en un proceso de transición desde sistemas comunistas de planificación centralizada a economías de mercado (Bulgaria, Eslovaquia, Eslovenia, Estonia, Hungría, Letonia, Lituania, Polonia, la República Checa y Rumania). Por otro, tres países mediterráneos (Chipre, Malta y Turquía). El pasado 12 de diciembre, en la Cumbre de Copenhague, se acordó la entrada en la UE de un primer grupo amplio de países, todos menos Bulgaria, Rumania y Turquía, de manera que estos 10 países y los actuales miembros puedan ratificar los tratados de adhesión durante 2003 y que todos ellos participen en las elecciones al Parlamento Europeo en 2004 como miembros de la UE. Para Bulgaria y Rumania, la fecha de adhesión que actualmente se baraja como más probable es 2007, mientras que para Turquía se ha fijado la fecha de diciembre de 2004 para evaluar si cumple con todos los criterios políticos y democráticos que requiere la UE para poder empezar a negociar a partir de ese momento. URL: https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/BoletinEconomico/02/Fich/be0212-art6.pdf
This article addresses the issue of causality in the relationship between political and economic freedom and economic growth in transition countries. This problem has been discussed in the literature but the results concerning political freedom and economic growth are still ambiguous. Moreover, owing to the impact of time we now have at our disposal significantly longer time series, which in this kind of research is especially important. The analysis was conducted for 25 post-socialist countries for 1990–2008 using a set of 20 indicators of economic and political freedom and Granger causality tests. The results show that although economic freedom has a positive impact on economic growth in transition countries, political freedom is neutral for economic growth; changes in the level of political freedom are however influenced by economic growth.
While after the collapse of the communist bloc virtually all of its former member countries embarked on market-oriented reforms,
the individual countries followed different routes and experienced different outcomes. In all cases, however, output declined
steeply during the early years of transition. What were the main causes behind the severe contraction of output? Why have
some countries managed to overcome the transformation crisis far better than others?
This paper analyzes the relationship between fiscal adjustment and real GDP growth in a panel of 26 transition economies during 1992-2001. Unlike most previous studies using cross-country regressions, the paper finds a positive and statistically significant relationship between fiscal adjustment and growth that is robust to different model specifications and estimation methods. The paper also presents country experiences to delve deeper into the mechanisms that may underlie this statistical relationship.
The collapse of the Cuban economy following the cessation of Soviet assistance gave way to a strong recovery in 1994-96. There are three possible explanations for this recovery: (i) that it never took place; (ii) that it reflected a surge in productivity resulting from stabilization and liberalization in 1993-94; or (iii) that it resulted from a favorable aggregate demand shock. The second explanation-the most persuasive-suggests that a strong and durable expansion will probably not be achieved on the basis of present policies, but that the benefits of a full liberalization of the economy are likely to be considerable.
While output declined in virtually all transition economies in the initial years, the speed and extent of the recovery that followed has varied widely across these countries. The contrast between the more and less successful transitions, the latter largely in the former Soviet Union, raises many questions about the relative roles played by adverse initial conditions, external factors, and reform strategies. This paper summarizes the macroeconomic performance of the transition economies. We first review the initial conditions confronting these economies, the reform strategy that was proposed, and the associated controversies that arose a decade ago. We then account for the widely different outcomes, highlighting the role of exogenous factors and the macroeconomic and structural policies adopted by the countries. We find that both stabilization policies and structural reforms, particularly privatization, contributed to the growth recovery. We also conclude that the faster is the speed of reforms, the quicker is the recovery and the higher is growth.
De l'adhesion prochaine de huit PECO a l'Union europeenne s'ensuivra, a plus ou moins breve echeance, leur entree dans la zone euro. Les deficits courants de ces pays sont analyses dans cette perspective afin, en particulier, d'evaluer la necessite et la possibilite de quantifier le critere qualitatif correspondant contenu dans le traite de Maastricht. Des soldes courants de reference sont estimes au moyen de l'application d'une contrainte de solvabilite et de l'analyse econometrique de l'influence des determinants identifiables de l'equilibre epargne-investissement.
To examine whether the exchange rate regime in place has any impact on inflatio n and growth performance in transition economies, the study develops an empirical framework that addresses some of the main problems plaguing empirical work in this strand of the literature, namely the Lucas critique, endogeneity of the exchange rate regime, and the sample selection problem. Empirical results demonstrate that exchange rate regime does make a difference for inflation performance. The findings indicate that transition countries with intermediate arrangements may achieve lower inflation if they were to adopt a fixed regime. The results also suggest that switching from a floating regime to an intermediate arrangement may not deliver lower inflation. Furthermore, an interesting empirical finding worth highlighting is that an unanticipated float---a situation describing a country where fundamentals suggest it is likely to adopt another regime, but it adopts a floating regime---results in lower inflation. Based our results, however, it is not possible to make any inference about particular exchange rate regime being superior to another in terms of growth performance. Nonetheless, empirical findings underscore that policy variables---and also other variables influencing economic activity---do have different effects on growth under different exchange rate arrangements.
In analyzing the transitional experience of countries in Central and Eastern Europe (CEE) and the former Soviet Union (FSU), the authors find strong common patterns for countries at similar stages of reform despite differences in initial conditions. To establish rankings, the authors create a reform index combining the intensity and duration of economic liberalization. Freeing domestic prices is one element of reform captured by the index; it was needed to enable governments to cut subsidies and restore macroeconomic balance. Other dimensions of reform captured by the index are liberalization of external trade, including foreign currency convertibility, and facilitation of private sector entry through privatization of state enterprises and improvements in the environment for private sector development. Some countries moved faster on reform than others, and one major reason appeared to have been the pace of political liberalization. Liberalization has, indeed, encouraged capital and labor to reallocate from industry toward services, many of which were previously repressed; and the repressed sectors fueled the return to positive growth in fast reformers. For slow reformers, the main problem in achieving stabilization has been the continued monetization of fiscal and quasi-fiscal deficits, associated with attempts to maintain employment in the old system. Among the policy implications are: 1) stabilization is a priority for the resumption of growth, and this requires extensive liberalization; 2) stabilization is made difficult by output contractions in the early stages of liberalization, by limited external financing, and by very large depreciations of the real exchange rate; and 3) there is no evidence that a slower pace of reform strengthens the fiscal position of slow reformers; their consolidated fiscal and quasi-fiscal deficits are quite high.
The transition from a planned economy to a market economy involves a complex process of institutional, structural, and behavioral change. This article develops an index of economic liberalization and analyzes its interaction with growth and inflation, using data from twenty-six transition countries for 1989-94. The article reveals two paradoxes of transition. First the attempt to maintain output by subsidizing enterprises results in larger declines in output than occur under a policy or reducing subsidies. Second, price liberalization results in lower inflation than occurs under a policy of continued price controls. Strong common patterns exist among countries at similar stages of reform. The common legacy and the associated changes that result from initial disruptions in the socialist economic coordinating mechanisms and subsequent liberalization measures go a long way toward explaining the transition experience. Because strong interactions between liberalization and stabilization are likely, stabilization becomes a priority for the resumption of growth. Copyright 1996 by Oxford University Press.
The authors analyze the growth and stabilization experience in twenty-six transition economies in Eastern Europe, the former Soviet Union, and Mongolia for the period 1989-94. Inflation rates have declined significantly in most countries following an inflation stabilization program. Typically, stabilization has been followed by growth within two years; and growth does not occur without stabilization. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation. Copyright 1996 by American Economic Association.
Experience with the transition from plan to market has varied greatly across the reforming socialist countries. By the start of 1996 transition countries fell into three broad categories — growing, recovering, and lagging (Table 1). In the first category, China and Vietnam have experienced uninterrupted growth in real GDP since the beginning of their reforms in 1978 and 1986, respectively. Poorer and more rural than the socialist countries of Central and Eastern Europe (CEE) and the Newly Independent States (NIS) of the former Soviet Union, they started reforms under very different structural and macroeconomic conditions (see Sachs and Woo, 1994; McKinnon, 1994). In particular, their state sectors were relatively small, household savings were low, and they were under-financialised. This was in sharp contrast to the high household savings that had produced a large money overhang in most CEE and NIS countries at the start of reform. Also, China’s trading relations were independent of the planned CMEA system, whose collapse disrupted trade in CEE and NIS, while Vietnam was only partially integrated into this system.