Gradualism versus Big Bang: Evidence from Transition Countries
AbstractThis paper uses previous empirical work to simulate the impact on real economic growth of the big bang and gradualist approaches to reform. Uncertainty concerning the appropriate reform steps introduces the possibility of reform reversals. We find that higher expected probabilities of reversal make policymakers more likely to opt for gradualism. Even relatively small probabilities are su.cient to tilt the balance in favour of gradualism. This is reinforced by shortsightedness of policymakers that follows from standard political cycles, but may be moderated by voter myopia.
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Bibliographic InfoPaper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 04/243.
Length: 11 pages
Date of creation: Apr 2004
Date of revision:
policy reform; gradualism; big bang;
Find related papers by JEL classification:
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
- P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
- P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
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