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Economic Transition, Entrepreneurial Capacity, and Intergenerational Distribution

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Author Info

  • Thomas Fox Rutherford
  • Svend E. Hougaard Jensen
  • Tobias N. Rasmussen

Abstract

A defining feature of transition economies is the expansion of the private sector. Motivated by the observation that new enterprises in transition economies seem to have a strong preference for recruiting young people, this paper studies intergenerational redistribution following from market reforms that stimulate private sector activity and firm creation. We implement a theoretical model and find that in some cases more than half of the current working age population may be made worse off by an increase in entrepreneurial capacity. This may help explain why market reforms have been voted down despite their long-run benefits.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/180.

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Length: 28
Date of creation: 01 Oct 2002
Date of revision:
Handle: RePEc:imf:imfwpa:02/180

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Related research

Keywords: Transition economies; Economic growth; capital losses; capital mobility; capital markets; international capital markets; endogenous growth; open economy; political economy; international capital; trade deficit; international trade; intermediate inputs; world market; capital accumulation; aggregate consumption; elasticity of substitution; trade liberalization; value of knowledge; domestic prices; market liberalization; world markets; perfect competition; capital market; intermediate goods; effects of trade liberalization; capital stock; world capital market; domestic economy; value of imports; free entry; endogenous ? growth; transition path; capital depreciation; capital gains; capital investments; closed economy; output growth; domestic market; world market price; trade restriction;

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  1. David Altig, 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 91(3), pages 574-595, June.
  2. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1992. "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data," American Economic Review, American Economic Association, American Economic Association, vol. 82(5), pages 1177-98, December.
  3. Rasmussen, Tobias N. & Rutherford, Thomas F., 2004. "Modeling overlapping generations in a complementarity format," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(7), pages 1383-1409, April.
  4. Jensen, Svend E Hougaard & Rutherford, Thomas F, 2002. " Distributional Effects of Fiscal Consolidation," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 104(3), pages 471-93, September.
  5. Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
  6. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, American Economic Association, vol. 77(2), pages 56-62, May.
  7. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
  8. Philippe Aghion & Simon Commander, 1999. "On the dynamics of inequality in the transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 7(2), pages 275-298, July.
  9. James R. Markusen & Thomas F. Rutherford & David Tarr, 2000. "Foreign Direct Investments in Services and the Domestic Market for Expertise," NBER Working Papers 7700, National Bureau of Economic Research, Inc.
  10. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(4), pages 759-84, August.
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