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Mind the break! Accounting for changing patterns of growth during transition

  • Fidrmuc, Jan
  • Tichit, Ariane

We argue that econometric analyses of post-communist countries are vulnerable to structural breaks across time and/or countries. We demonstrate this by identifying structural breaks in growth regressions estimated for 25 countries over 18 years. The method we use 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 that the pattern of growth in transition has changed at least three times, yielding four different models of growth. The speed with which individual countries progress through these stages differs considerably.

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Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 33 (2009)
Issue (Month): 2 (June)
Pages: 138-154

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Handle: RePEc:eee:ecosys:v:33:y:2009:i:2:p:138-154
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  9. Fidrmuc, Jan, 2001. "Economic Reform, Democracy and Growth during Post-Communist Transition," CEPR Discussion Papers 2759, C.E.P.R. Discussion Papers.
  10. de Melo, Martha & Denizer, Cevdet & Gelb, Alan, 1996. "Patterns of Transition from Plan to Market," World Bank Economic Review, World Bank Group, vol. 10(3), pages 397-424, September.
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  16. Elisabetta Falcetti & Martin Raiser & Peter Sanfey, 2000. "Defying the odds: initial conditions, reforms and growth in the first decade of transition," Working Papers 55, European Bank for Reconstruction and Development, Office of the Chief Economist.
  17. Campos, Nauro F & Coricelli, Fabrizio, 2002. "Growth in Transition: What we Know, What we Don't and What we Should," CEPR Discussion Papers 3246, C.E.P.R. Discussion Papers.
  18. Jushan Bai & Pierre Perron, 2003. "Critical values for multiple structural change tests," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 72-78, 06.
  19. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
  20. Roxana Radulescu & David Barlow, 2002. "The relationship between policies and growth in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 719-745, November.
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  22. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan, vol. 42(1), pages 1-57, April.
  23. Ratna Sahay & Jeromin Zettelmeyer & Eduardo Borensztein & Andrew Berg, 1999. "The Evolution of Output in Transition Economies; Explaining the Differences," IMF Working Papers 99/73, International Monetary Fund.
  24. Andrzej Rzońca & Piotr Ciżkowicz, 2003. "A comment on "The relationship between policies and growth in transition countries"," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(4), pages 743-748, December.
  25. Rusinova, Desislava, 2007. "Growth in transition: Reexamining the roles of factor inputs and geography," Economic Systems, Elsevier, vol. 31(3), pages 233-255, September.
  26. Easterly, William & Fischer, Stanley, 1995. "The Soviet Economic Decline," World Bank Economic Review, World Bank Group, vol. 9(3), pages 341-71, September.
  27. Campos, Nauro F., 2001. "Will the Future Be Better Tomorrow? The Growth Prospects of Transition Economies Revisited," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 663-676, December.
  28. Selowsky, Marcelo & Martin, Ricardo, 1997. "Policy Performance and Output Growth in the Transition Economies," American Economic Review, American Economic Association, vol. 87(2), pages 349-53, May.
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