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Enterprises in Transition: Macroeconomic Influences on Enterprise Decision-Making and Performance

  • W.H. Buiter
  • R Lagos
  • H Rey

This paper analyses the theoretical arguments and empirical evidence linking enterprise performance in transition economies to the macroeconomic environment. Macroeconomic instability is traced to the unsustainability of the fiscal-financial and monetary programmes of the state and to regulatory and other failures leading to problems with the solvency of financial institutions. The importance of macroeconomic stability for enterprise performance is documented with a simulation study and by reviewing relevant microeconomic and aggregate empirical evidence from across the world, as well as from the transition economies themselves. Conclusions are reached about the speed of transition, about the synergy between macroeconomic stabilisation and market development and about the creation of institutions for achieving and maintaining macroeconomic stability.

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File URL: http://cep.lse.ac.uk/pubs/download/DP0340.pdf
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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0340.

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Date of creation: Mar 1997
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Handle: RePEc:cep:cepdps:dp0340
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Buiter, Willem H. & Lago, Ricardo & Rey, Hélène, 1997. "Enterprises in Transition: Macroeconomic Influences on Enterprise Decision-making and Performance," CEPR Discussion Papers 1601, C.E.P.R. Discussion Papers.
  2. Andrew B. Abel & Avinash K. Dixit & Janice B. Eberly & Robert S. Pindyck, . "Options, the Value of Capital, and Investment," Rodney L. White Center for Financial Research Working Papers 15-95, Wharton School Rodney L. White Center for Financial Research.
  3. Pindyck, Robert S. & Solimano, Andrés., 1993. "Economic instability and aggregate investment," Working papers 3552-93., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  4. John V. Leahy & Toni M. Whited, 1995. "The Effect of Uncertainty on Investment: Some Stylized Facts," NBER Working Papers 4986, National Bureau of Economic Research, Inc.
  5. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  6. David Bradford, . "Consumption Taxes: Some Fundamental Transition Issues," EPRU Working Paper Series 95-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  7. 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.
  8. W.H. Buiter & R Lagos & H Rey, 1997. "A Portfolio Approach to a Cross-Sectoral and Cross-National Investment Strategy in Transition Economics," CEP Discussion Papers dp0320, Centre for Economic Performance, LSE.
  9. Easterly, William & da Cunha, Paulo Viera & DEC, 1994. "Financing the storm : macroeconomic crisis in Russia, 1992-93," Policy Research Working Paper Series 1240, The World Bank.
  10. Schaffer, Mark, 1993. "The enterprise sector and emergence of the Polish fiscal crisis, 1990-91," Policy Research Working Paper Series 1195, The World Bank.
  11. William Easterly & Paulo Vieira Cunha, 1994. "Financing the storm: macroeconomic crisis in Russia 1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 443-465, December.
  12. Stanley Fischer, 1991. "Growth, Macroeconomics, and Development," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 329-379 National Bureau of Economic Research, Inc.
  13. Stanley Fischer, 1991. "Growth, Macroeconomics, and Development," NBER Working Papers 3702, National Bureau of Economic Research, Inc.
  14. Eliana Cardoso, 1992. "Inflation and Poverty," NBER Working Papers 4006, National Bureau of Economic Research, Inc.
  15. Fischer, S., 1991. "Growth, Macroeconomics, and Development," Working papers 580, Massachusetts Institute of Technology (MIT), Department of Economics.
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