Fiscal constraints and the speed of transition
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.
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- Bankim Chadha & Fabrizio Coricelli & KornÃ©lia KrajnyÃ¡k, 1993.
"Economic Restructuring, Unemployment, and Growth in a Transition Economy,"
IMF Staff Papers,
Palgrave Macmillan, vol. 40(4), pages 744-780, December.
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- Kornai, J. & Ely, R.T., 1992. "The Postsocialist Transition and the State: Reflections in the Light of Hungarian Fiscal Problems," Harvard Institute of Economic Research Working Papers 1583, Harvard - Institute of Economic Research.
- 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.
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- 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.
- 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.
- 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)
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