The Dynamic Adjustment of a Transition Economy in the Early Stages of Transformation
AbstractThis paper develops a model of a representative transition economy to explain the stylised facts of output declines and real exchange rate appreciation in the early stages of transformation. These facts can be explained by supply-side shocks, interest rate liberalisation or a reduction in core inflation. The policy implication is that price liberalisation in advance of financial liberalization and structural reform, including widespread privatisation of the production process, necessarily results in some temporary loss of output.
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Bibliographic InfoPaper provided by Bank of Greece in its series Working Papers with number 03.
Length: 20 pages
Date of creation: May 2003
Date of revision:
Publication status: Published in Journal of Macroeconomics, 2004, 26 (3), pp.547-561
Transition dynamics; overshooting; competitiveness; output decline;
Other versions of this item:
- Papazoglou, Christos & Pentecost, Eric J., 2004. "The dynamic adjustment of a transition economy in the early stages of transformation," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 547-561, September.
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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