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Enterprises in transition: macroeconomic influences on enterprise decision-making and performance

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  • Buiter, Willem H.
  • Lago, R.
  • Rey, H.

Abstract

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.

Suggested Citation

  • Buiter, Willem H. & Lago, R. & Rey, H., 1997. "Enterprises in transition: macroeconomic influences on enterprise decision-making and performance," LSE Research Online Documents on Economics 20348, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20348
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    File URL: http://eprints.lse.ac.uk/20348/
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    References listed on IDEAS

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    1. Robert S. Pindyck & Andrés Solimano, 1993. "Economic Instability and Aggregate Investment," NBER Chapters,in: NBER Macroeconomics Annual 1993, Volume 8, pages 259-318 National Bureau of Economic Research, Inc.
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    5. 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.
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    7. 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.
    8. Willem H. Buiter & Ricardo Lago & Hélène Rey, 1997. "A portfolio approach to a cross-sectoral and cross-national investment strategy in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 63-96, May.
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    11. Pazos, Felipe, 1990. "Runaway inflation: experiences and options," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    12. Eliana Cardoso, 1992. "Inflation and Poverty," NBER Working Papers 4006, National Bureau of Economic Research, Inc.
    13. Buiter, Willem H. & Lago, R. & Rey, H., 1997. "Enterprises in transition: macroeconomic influences on enterprise decision-making and performance," LSE Research Online Documents on Economics 20348, London School of Economics and Political Science, LSE Library.
    14. Leahy, John V & Whited, Toni M, 1996. "The Effect of Uncertainty on Investment: Some Stylized Facts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(1), pages 64-83, February.
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    16. Schaffer, Mark, 1993. "The enterprise sector and emergence of the Polish fiscal crisis, 1990-91," Policy Research Working Paper Series 1195, The World Bank.
    17. UNICEF Innocenti Research Centre. MONEE project, 1994. "Crisis in Mortality, Health and Nutrition," Papers remore94/7, Regional Monitoring Report.
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    Cited by:

    1. Buiter, Willem H., 1996. "Aspects of Fiscal Performance in some Transition Economies under Fund-supported Programs," CEPR Discussion Papers 1535, C.E.P.R. Discussion Papers.
    2. Willem H. Buiter & Ricardo Lago & Hélène Rey, 1997. "A portfolio approach to a cross-sectoral and cross-national investment strategy in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 63-96, May.
    3. 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.
    4. French-German Economic Forum, 1999. "Reduction of Working Time," Working Papers 1999-13, CEPII research center.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • J1 - Labor and Demographic Economics - - Demographic Economics

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