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Stabilization and Growth in Transition Economies: The Early Experience

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  • S. Fisher
  • R. Sahay
  • C. A. Vegh

Abstract

The authors analyze the growth and stabilization experience in twenty-six transition economies in Eastern Europe, the former Soviet Union, and Mongolia for the period 1989-94. Inflation rates have declined significantly in most countries following an inflation stabilization program. Typically, stabilization has been followed by growth within two years; and growth does not occur without stabilization. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation.
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Suggested Citation

  • S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 5.
  • Handle: RePEc:nos:voprec:1997-05-0186
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    JEL classification:

    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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