IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Reforms and growth in transition: Re-examining the evidence

  • Falcetti, Elisabetta
  • Lysenko, Tatiana
  • Sanfey, Peter

A positive link between progress in market-oriented reforms and cumulative growth has been recorded across transition countries. Some less reform-minded countries, however, have also grown strongly in recent years. This paper examines whether there is a robust causal impact of reforms on growth, and whether there are important feedback influences from growth to reform. Strong evidence has been found for both effects. Progress in transition in one period can significantly affect growth in the subsequent period, and this growth can act as an immediate spur to further reform. While the importance of initial conditions as a determinant of growth has declined over time, fiscal surpluses are positively associated with higher growth. Other factors such as recovery, oil prices and external growth also drive growth to some extent but do not mitigate the importance of reforms. These results still hold when one controls for the influence of the current level of output on future growth.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/B6WHV-4KW0MS6-3/2/98e60b30a43da6bb9e560911640e782b
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 under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 34 (2006)
Issue (Month): 3 (September)
Pages: 421-445

as
in new window

Handle: RePEc:eee:jcecon:v:34:y:2006:i:3:p:421-445
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622864

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
  2. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  3. 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.
  4. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  5. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  6. S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
  7. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  8. Jan Fidrmuc & Ariane Tichit, 2009. "Mind the Break! Accounting for Changing Patterns of Growth during Transition," CEDI Discussion Paper Series 09-02, Centre for Economic Development and Institutions(CEDI), Brunel University.
  9. B. Merlevede, 2003. "Reform Reversals and Output Growth in Transition Economies," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/183, Ghent University, Faculty of Economics and Business Administration.
  10. Carruth, A.A. & Hooker, M.A. & Oswald, A.J., 1998. "Unemployment Equilibria and Input Prices: Theory and Evidence from the United States," The Warwick Economics Research Paper Series (TWERPS) 496, University of Warwick, Department of Economics.
  11. Kasper Bartholdy, 1997. "Old and new problems in the estimation of national accounts in transiton economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 131-146, 05.
  12. Francisco Alcalá & Antonio Ciccone, 2001. "Trade and productivity," Economics Working Papers 580, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2002.
  13. Kim, Byung-Yeon & Pirttilä, Jukka, 2003. "The political economy of reforms: Empirical evidence from post-communist transition in the 1990s," BOFIT Discussion Papers 4/2003, Bank of Finland, Institute for Economies in Transition.
  14. Berta Heybey & Peter Murrell, 1999. "The relationship between economic growth and the speed of liberalization during transition," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(2), pages 121-137.
  15. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  16. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
  17. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
  18. International Monetary Fund, 2004. "Once Again, is Openness Good for Growth?," IMF Working Papers 04/135, International Monetary Fund.
  19. Oleh Havrylyshyn, 2001. "Recovery and Growth in Transition: A Decade of Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 4.
  20. 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.
  21. Atish R. Ghosh, 1997. "Inflation in Transition Economies; How Much? and Why?," IMF Working Papers 97/80, International Monetary Fund.
  22. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  23. Ivanna Vladkova Hollar & Giovanni Dell'Ariccia & Carlo Cottarelli, 2003. "Early Birds, Late Risers, and Sleeping Beauties; Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans," IMF Working Papers 03/213, International Monetary Fund.
  24. Fidrmuc, Jan, 2001. "Economic Reform, Democracy and Growth during Post-Communist Transition," CEPR Discussion Papers 2759, C.E.P.R. Discussion Papers.
  25. Elena Loukoianova & Anna Unigovskaya, 2004. "Analysis of Recent Growth in Low-Income Cis Countries," IMF Working Papers 04/151, International Monetary Fund.
  26. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," NBER Working Papers 7664, National Bureau of Economic Research, Inc.
  27. Staehr, Karsten, 2003. "Reforms and economic growth in transition economies: Complementarity, sequencing and speed," BOFIT Discussion Papers 1/2003, Bank of Finland, Institute for Economies in Transition.
  28. Bond, Stephen Roy & Hoeffler, Anke & Temple, Jonathan, 2001. "GMM Estimation of Empirical Growth Models," CEPR Discussion Papers 3048, C.E.P.R. Discussion Papers.
  29. Woodford, Michael, 1994. "Monetary Policy and Price Level Determinacy in a Cash-in-Advance Economy," Economic Theory, Springer, vol. 4(3), pages 345-80.
  30. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," IMF Working Papers 00/30, International Monetary Fund.
  31. 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.
  32. Mária Lackó, 2000. "Hidden Economy - an Unknown Quantity? Comparative Analysis of Hidden Economies in Transition Countries, 1989-95," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 117-149, March.
  33. Wolf, H.C., 1999. "Transition Strategies: Choices and Outcomes," Princeton Studies in International Economics 85, International Economics Section, Departement of Economics Princeton University,.
  34. 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.
  35. Uhlig, Harald, 1999. "What are the Effects of Monetary Policy on Output? Results from an Agnostic Identification Procedure," CEPR Discussion Papers 2137, C.E.P.R. Discussion Papers.
  36. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
  37. van Riet, Ad, 2010. "Euro area fiscal policies and the crisis," Occasional Paper Series 109, European Central Bank.
  38. Prakash Loungani & Nathan Sheets, 1995. "Central bank independence, inflation and growth in transition economies," International Finance Discussion Papers 519, Board of Governors of the Federal Reserve System (U.S.).
  39. 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.
  40. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  41. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  42. repec:chb:bcchwp:03 is not listed on IDEAS
  43. Krueger, Gary & Ciolko, Marek, 1998. "A Note on Initial Conditions and Liberalization during Transition," Journal of Comparative Economics, Elsevier, vol. 26(4), pages 718-734, December.
  44. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  45. van Aarle, Bas & Garretsen, Harry & Gobbin, Niko, 2003. "Monetary and fiscal policy transmission in the Euro-area: evidence from a structural VAR analysis," Journal of Economics and Business, Elsevier, vol. 55(5-6), pages 609-638.
  46. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  47. Oleh Havrylyshyn & Ron van Rooden, 2003. "Institutions Matter in Transition, But So Do Policies," Comparative Economic Studies, Palgrave Macmillan, vol. 45(1), pages 2-24, March.
  48. Sims, Christopher A, 1994. "A Simple Model for Study of the Determination of the Price Level and the Interaction of Monetary and Fiscal Policy," Economic Theory, Springer, vol. 4(3), pages 381-99.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:34:y:2006:i:3:p:421-445. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.