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Mind the Break! Accounting for Changing Patterns of Growth during Transition

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  • Jan Fidrmuc

    ()

  • Ariane Tichit

    ()

Abstract

We argue that econometric analyses based on transition countries’ data can be vulnerable to structural breaks across time and/or countries. We demonstrate this argument by identifying structural breaks in growth regressions estimated with data for 25 countries and 12 years. Our method allows identification of structural breaks at a-priori unknown points in space or time. The only prior assumption is that breaks occur in relation to progress in implementing market-oriented reforms. We find robust evidence that the pattern of growth in transition has changed at least two times, yielding thus three different models of growth associated with different stages of reform. The speed with which individual countries progress through these stages differs dramatically, however.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2004-643.

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Length: 30 pages
Date of creation: 01 Jan 2004
Date of revision:
Handle: RePEc:wdi:papers:2004-643

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Keywords: Growth; reform; structural breaks; transition;

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Citations

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Cited by:
  1. Kocenda, Evzen, 2005. "Beware of breaks in exchange rates: Evidence from European transition countries," Economic Systems, Elsevier, Elsevier, vol. 29(3), pages 307-324, September.
  2. Evzen Kocenda & Ali M. Kutan & M. Taner Yigit, 2005. "Pilgrims to Eurozone: How Far, How Fast," Departmental Working Papers, Bilkent University, Department of Economics 0501, Bilkent University, Department of Economics.
  3. Alexander Salhi & Andreas Kern & Martin Rößler, 2010. "Growth Patterns in the CIS-8: A Political Economy Approach," Transition Studies Review, Springer, Springer, vol. 17(4), pages 686-708, December.
  4. Foster, Neil & Stehrer, Robert, 2007. "Modeling transformation in CEECs using smooth transitions," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 57-86, March.
  5. Jan Babecky & Tomas Havranek, 2014. "Structural reforms and growth in transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 22(1), pages 13-42, 01.
  6. Evzen Kocenda & Ali M. Kutan & Taner M. Yigit, 2005. "Pilgrims to the Eurozone: How Far, How Fast?," CERGE-EI Working Papers wp279, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  7. Falcetti, Elisabetta & Lysenko, Tatiana & Sanfey, Peter, 2006. "Reforms and growth in transition: Re-examining the evidence," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 421-445, September.
  8. DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  9. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Growth in Transition: A Meta-Analysis," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp1057, William Davidson Institute at the University of Michigan.
  10. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Economic Growth: A Meta-Analysis," Working Papers, Czech National Bank, Research Department 2013/08, Czech National Bank, Research Department.
  11. Mariam Camarero & Josep Lluis Carrion Silvestre & Cecilio Tamarit, 2005. "Unemployment dynamics and NAIRU estimates for CEECs : A univariate approach," Working Papers in Economics, Universitat de Barcelona. Espai de Recerca en Economia 131, Universitat de Barcelona. Espai de Recerca en Economia.
  12. Jan HANOUSEK & Evžen KOČENDA, 2010. "Public investment and fiscal performance in new EU member states," Departmental Working Papers, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano 2010-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  13. Neil Foster-McGregor & Robert Stehrer, 2005. "Modelling GDP in CEECs Using Smooth Transitions," wiiw Working Papers, The Vienna Institute for International Economic Studies, wiiw 36, The Vienna Institute for International Economic Studies, wiiw.
  14. Pääkkönen, Jenni, 2010. "Economic freedom as driver of growth in transition," Economic Systems, Elsevier, Elsevier, vol. 34(4), pages 469-479, December.
  15. Jan Hanousek & Evžen Kočenda, 2011. "Public Investment and Fiscal Performance in the New EU Member States," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 32(1), pages 43-71, 03.
  16. Camarero, Mariam & Carrion-i-Silvestre, Josep Lluis & Tamarit, Cecilio, 2005. "Unemployment dynamics and NAIRU estimates for accession countries: A univariate approach," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 584-603, September.
  17. Jindra, Björn & Giroud, Axèle & Scott-Kennel, Joanna, 2009. "Subsidiary roles, vertical linkages and economic development: Lessons from transition economies," Journal of World Business, Elsevier, Elsevier, vol. 44(2), pages 167-179, April.
  18. Doris Hanzl-Weiss & Mario Holzner & Roman Stöllinger, 2013. "Monthly Report No. 4/2013," wiiw Monthly Reports, The Vienna Institute for International Economic Studies, wiiw 2013-04, The Vienna Institute for International Economic Studies, wiiw.
  19. Jan Hanousek & Evžen Kočenda, 2011. "Corruption and Economic Freedom Links to Public Finance and Investment in New EU Members," Politická ekonomie, University of Economics, Prague, University of Economics, Prague, vol. 2011(3), pages 310-328.
  20. Pääkkönen, Jenni, 2009. "Economic Freedom as a Driver for Growth in Transition," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 1/2009, Bank of Finland, Institute for Economies in Transition.
  21. Ayala, Astrid & Blazsek, Szabolcs, 2013. "Structural breaks in public finances in Central and Eastern European countries," Economic Systems, Elsevier, Elsevier, vol. 37(1), pages 45-60.

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