IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v52y1997i1p221-249.html
   My bibliography  Save this article

Fiscal constraints and the speed of transition

Author

Listed:
  • Chadha, Bankim
  • Coricelli, Fabrizio

Abstract

This paper develops a model of the process of reallocation of resources from a declining state sector to an expanding private sector. The transition is shown to be costly in that it entails unemployment and a deterioration of the fiscal balance. The interaction of fiscal constraints with the transition process is examined. It is shown that fiscal constraints may induce the government to maintain the state sector, slowing the speed of transition, and could jeopardize the eventual outcome of the process of restructuring.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Chadha, Bankim & Coricelli, Fabrizio, 1997. "Fiscal constraints and the speed of transition," Journal of Development Economics, Elsevier, vol. 52(1), pages 221-249, February.
    • Handle: RePEc:eee:deveco:v:52:y:1997:i:1:p:221-249
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304-3878(96)00433-6
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Edmund S. Phelps, 1992. "Consumer Demand and Equilibrium Unemployment in a Working Model of the Customer-Market Incentive-Wage Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 1003-1032.
    2. Bankim Chadha & Fabrizio Coricelli & Kornélia Krajnyák, 1993. "Economic Restructuring, Unemployment, and Growth in a Transition Economy," IMF Staff Papers, Palgrave Macmillan, vol. 40(4), pages 744-780, December.
    3. Mr. Elias Dinopoulos & Mr. Timothy D. Lane, 1991. "Fiscal Constraintson Market-Oriented Reform in a Socialist Economy," IMF Working Papers 1991/075, International Monetary Fund.
    4. Michael Bruno, 1992. "Stabilization and Reform in Eastern Europe: A Preliminary Evaluation," IMF Staff Papers, Palgrave Macmillan, vol. 39(4), pages 741-777, December.
    5. Mr. Michael Bruno, 1992. "Stabilization and Reform in Eastern Europe: A Preliminary Evaluation," IMF Working Papers 1992/030, International Monetary Fund.
    6. Bankim Chadha, 1991. "Wages, Profitability, and Growth in a Small Open Economy," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 59-82, March.
    7. Mr. Vito Tanzi, 1993. "Fiscal Policy and the Economic Restructuring of Economies in Transition," IMF Working Papers 1993/022, International Monetary Fund.
    8. Kornai, Janos, 1992. "The Postsocialist Transition and the State: Reflections in the Light of Hungarian Fiscal Problems," American Economic Review, American Economic Association, vol. 82(2), pages 1-21, May.
    9. Calvo, Guillermo A, 1978. "Urban Employment and Wage Determination in LDC's: Trade Unions in the Harris-Todaro Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(1), pages 65-81, February.
    10. Calvo, Guillermo, 1979. "Quasi-Walrasian Theories of Unemployment," American Economic Review, American Economic Association, vol. 69(2), pages 102-107, May.
    11. Blanchard, Olivier Jean & Diamond, Peter, 1992. "The Flow Approach to Labor Markets," American Economic Review, American Economic Association, vol. 82(2), pages 354-359, May.
    12. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    13. Burda, Michael C, 1992. "Unemployment, Labour Market Institutions and Structural Change in Eastern Europe," CEPR Discussion Papers 746, C.E.P.R. Discussion Papers.
    14. Guillermo A. Calvo & Jacob A. Frenkel, 1991. "From Centrally Planned to Market Economy: The Road from CPE to PCPE," IMF Staff Papers, Palgrave Macmillan, vol. 38(2), pages 268-299, June.
    15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Buiter, Willem H., 1996. "Aspects of Fiscal Performance in some Transition Economies under Fund-supported Programs," CEPR Discussion Papers 1535, C.E.P.R. Discussion Papers.
    2. Micael Castanheira, 2003. "Public finance and the optimal speed of transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 435-462, September.
    3. Jurajda, Stepán & Terrell, Katherine, 2008. "Job Reallocation in Two Cases of Massive Adjustment in Eastern Europe," World Development, Elsevier, vol. 36(11), pages 2144-2169, November.
    4. Nauro F. Campos & Abrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 793-836, September.
    5. Fabrizio Coricelli & Mathilde Maurel, 2011. "Growth and Crisis in Transition: A Comparative Perspective," Review of International Economics, Wiley Blackwell, vol. 19(1), pages 49-64, February.
    6. Mehrotra, Aaron, 2006. "Essays on empirical macroeconomics," Bank of Finland Scientific Monographs, Bank of Finland, volume 0, number sm2006_034, July.
    7. Treier, Volker, 1999. "Unemployment in reforming countries: Causes, fiscal impacts and the success of transformation," BERG Working Paper Series 29, Bamberg University, Bamberg Economic Research Group.
    8. Schroder, Philipp J. H., 2001. "On the speed and boundaries of structural adjustment when fiscal policy is tight," Economic Systems, Elsevier, vol. 25(4), pages 345-364, December.
    9. repec:zbw:bofism:2006_034 is not listed on IDEAS
    10. Karoly Fazekas & Jeno Koltay (ed.), 2002. "The Hungarian Labour Market 2002," The Hungarian Labour Market Yearbooks, Institute of Economics, Centre for Economic and Regional Studies, number 2002, December.
    11. Mehrotra, Aaron N. & Peltonen, Tuomas A., 2005. "Socio-economic development and fiscal policy: lessons from the cohesion countries for the new member states," Working Paper Series 467, European Central Bank.
    12. Haytham Y.M. Ewaida, 2017. "The Impact of Sovereign Debt on Growth: An Empirical Study on GIIPS versus JUUSD Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 607-633.
    13. Sukiassyan, Grigor, 2007. "Inequality and growth: What does the transition economy data say?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 35-56, March.
    14. Marilena Giannetti, 2005. "Macroeconomic Effects In the Acceding Countries," Working Papers in Public Economics 87, University of Rome La Sapienza, Department of Economics and Law.
    15. Fabrizio Coricelli, 1997. "Income distribution and the dynamics of reforms," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 510-514, November.
    16. Maxim Bouev, 2004. "Diverging Paths: Transition in the Presence of the Informal Sector," William Davidson Institute Working Papers Series 2004-689, William Davidson Institute at the University of Michigan.
    17. Stepan Jurajda & Katherine Terrell, 2000. "Optimal Speed of Transition: Micro Evidence from the Czech Republic," William Davidson Institute Working Papers Series 355, William Davidson Institute at the University of Michigan.
    18. Randolph Luca Bruno, 2006. "Optimal speed of transition with a shrinking labour force and under uncertainty," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 69-100, March.
    19. Barlow, David & Radulescu, Roxana, 2005. "The sequencing of reform in transition economies," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 835-850, December.
    20. Köllő, János, 2003. "Meddig tart a rendszerváltás?. Esettanulmány egy szövöde átalakulásáról, 1988-1996 [How long does the change of system take?. Case study of the transformation of a textile mill, 1988-1996]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 406-427.
    21. Maxim Bouev, 2001. "Labor Supply, Informal Economy and Russian Transition," William Davidson Institute Working Papers Series 408, William Davidson Institute at the University of Michigan.
    22. Mehrotra, Aaron, 2006. "Essays on empirical macroeconomics," Scientific Monographs, Bank of Finland, number 2006_034.
    23. Randolph Luca Bruno, 2003. "Speed of Transition, Unemployment Dynamics and Nonemployment Policies: Evidence from the Visegrad Countries," LEM Papers Series 2003/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    24. Bouev Maxim & Matveenko Vladimir & Vostroknutova Ekaterina, 1998. "Transformational Decline and Preconditions of Growth in Russia," EERC Working Paper Series 98-03e, EERC Research Network, Russia and CIS.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alan A. Carruth & Mark A. Hooker & Andrew J. Oswald, 1998. "Unemployment Equilibria And Input Prices: Theory And Evidence From The United States," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 621-628, November.
    2. Luca Barbone & Domenico Marchetti, 1995. "Transition and the fiscal crisis in Central Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(1), pages 59-74, March.
    3. Stadler, Manfred, 1996. "Elemente und Funktionsweise des strukturalistischen Ansatzes zur Erklärung der Arbeitslosigkeit," Tübinger Diskussionsbeiträge 65, University of Tübingen, School of Business and Economics.
    4. Randolph Luca Bruno, 2003. "Speed of Transition, Unemployment Dynamics and Nonemployment Policies: Evidence from the Visegrad Countries," LEM Papers Series 2003/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Heinrich, Ralph P., 1993. "Microeconomic adjustment in Hungary: Results from a survey of enterprises," Kiel Working Papers 599, Kiel Institute for the World Economy (IfW Kiel).
    6. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 417-434.
    7. P R Agénor, 2005. "The Analytics of Segmented Labor Markets," Centre for Growth and Business Cycle Research Discussion Paper Series 52, Economics, The University of Manchester.
    8. Tansel, Aysit & Öztürk, Ceyhan & Erdil, Erkan, 2021. "The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study," GLO Discussion Paper Series 929, Global Labor Organization (GLO).
    9. Turhan, Ibrahim M., 2008. "Why did it work this time: a comparative analysis of transformation of Turkish economy after 2002," MPRA Paper 31158, University Library of Munich, Germany.
    10. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    11. Sami Bibi, 2003. "On The Impact of Labor Tax Reforms on Unemployment in Tunisia," Working Papers 0330, Economic Research Forum, revised Oct 2003.
    12. van Aarle, B. & Budina, N., 1995. "Currency substitution in Eastern Europe," Other publications TiSEM ae2e408f-a310-4eb3-9d89-5, Tilburg University, School of Economics and Management.
    13. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    14. Rao, B. Bhaskara & Vadlamannati, Krishna Chaitanya, 2011. "Globalization and growth in the low income African countries with the extreme bounds analysis," Economic Modelling, Elsevier, vol. 28(3), pages 795-805, May.
    15. Djavad Salehi-Isfahani & Russell D. Murphy, 2006. "Labor market flexibility and investment in human capital," Working Papers e06-5, Virginia Polytechnic Institute and State University, Department of Economics.
    16. Céline Guivarch & Renaud Crassous & Olivier Sassi & Stéphane Hallegatte, 2009. "The costs of climate policies in a second best world with labour market," CIRED Working Papers hal-00866429, HAL.
    17. Pant, Hom & Warr, Peter, 2016. "Modelling Involuntary Unemployment in Applied GE Models," Conference papers 332799, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Jocelyn Horne, 1995. "The Economics of Transition and the Transition of Economics," The Economic Record, The Economic Society of Australia, vol. 71(4), pages 379-392, December.
    19. K. Dimitrova & Nikolay Nenovsky, 2002. "Dual Inflation under the Currency Board. The challenges of Bulgarian EU accession," Post-Print halshs-00259861, HAL.
    20. Enrico C Perotti, 1994. "A taxonomy of post‐socialist financial systems: decentralized enforcement and the creation of inside money," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 71-81, March.
    21. Raiser, Martin, 1992. "Soft budget constraints: An institutional interpretation of stylised facts in economic transformation in Central Eastern Europe," Kiel Working Papers 549, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:52:y:1997:i:1:p:221-249. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.