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How I learned to stop worrying and love the crisis

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  • Fidrmuc, Jan
  • Tichit, Ariane

Abstract

We investigate the effects of economic crises on the subsequent economic, performance, economic reform, democratization and institutional change. Our analysis is based on a sample of post-communist countries, most of which experienced severe economic, crises during the 1990s. We find that the severity of crisis has a positive impact on the subsequent pace of economic reform, economic growth and, with a delay, on investment and institutional change. Episodes of high inflation, moreover, translate into lower subsequent inflation. Crises thus serve as catalysts of reform and institutional change and lead to better long-term economic performance.

Suggested Citation

  • Fidrmuc, Jan & Tichit, Ariane, 2013. "How I learned to stop worrying and love the crisis," Economic Systems, Elsevier, vol. 37(4), pages 542-554.
  • Handle: RePEc:eee:ecosys:v:37:y:2013:i:4:p:542-554
    DOI: 10.1016/j.ecosys.2013.03.002
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    Cited by:

    1. Valentinov, Vladislav & Hielscher, Stefan & Pies, Ingo, 2015. "Nonprofit organizations, institutional economics, and systems thinking," Economic Systems, Elsevier, vol. 39(3), pages 491-501.
    2. Valentinov, Vladislav, 2015. "From equilibrium to autopoiesis: A Luhmannian reading of Veblenian evolutionary economics," Economic Systems, Elsevier, vol. 39(1), pages 143-155.

    More about this item

    Keywords

    Crisis; Transition; Growth; Inflation; Reform; Institutions;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

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