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Reform, Uncertainty and Spillovers - A Gravity Model Approach

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  • Jan Fidrmuc
  • Elira Karaja
  • Ariane Tichit

Abstract

Reforms often occur in waves, seemingly cascading from country to country. We argue that such reform waves may be driven by informational spillovers: uncertainty about the outcome of reform is reduced by learning from the experience of similar countries. We motivate this hypothesis with a simple theoretical model and then test it empirically. Our results confirm the presence of informational spillovers with respect to political liberalization but offer little support for informational spillovers with respect to economic reforms.

Suggested Citation

  • Jan Fidrmuc & Elira Karaja & Ariane Tichit, 2012. "Reform, Uncertainty and Spillovers - A Gravity Model Approach," CESifo Working Paper Series 3745, CESifo.
    • Handle: RePEc:ces:ceswps:_3745
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    References listed on IDEAS

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    1. Campos, Nauro F. & Horváth, Roman, 2006. "Reform Redux: Measurement, Determinants and Reversals," IZA Discussion Papers 2093, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    reform; transition; institutions; uncertainty; spillovers; contagion;
    All these keywords.

    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 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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