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Growth in Transition Countries: Big Bang versus Gradualism

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  • DELL'ANNO, Roberto

    ()
    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • VILLA, Stefania

    ()
    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

Abstract

This paper analyses the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate big-bang versus gradualist approach. It builds a new indicator for the speed of transition reforms based on a three-way principal component analysis. It shows that: (i) the speed of transition reforms Granger-causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization program, also drive economic growth. While the first two results are robust to different estimators, the impact of control variables depends on the econometric specification.

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Bibliographic Info

Paper provided by CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy in its series CELPE Discussion Papers with number 122.

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Length: 38 pages
Date of creation: 14 Nov 2012
Date of revision:
Handle: RePEc:sal:celpdp:0122

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Keywords: speed of transition; economic growth; three-way principal components analysis;

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