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New Evidenceon Fiscal Adjustment and Growth in Transition Economies

  • Sanjeev Gupta
  • Alejandro Simone
  • Alex Segura-Ubiergo

This paper analyzes the relationship between fiscal adjustment and real GDP growth in a panel of 26 transition economies during 1992-2001. Unlike most previous studies using cross-country regressions, the paper finds a positive and statistically significant relationship between fiscal adjustment and growth that is robust to different model specifications and estimation methods. The paper also presents country experiences to delve deeper into the mechanisms that may underlie this statistical relationship.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/244.

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Length: 33
Date of creation: 01 Oct 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/244
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  1. Wyplosz, Charles, 2000. "Ten years of transformation - macroeconomic lessons," Policy Research Working Paper Series 2288, The World Bank.
  2. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 1999. "Fiscal Policy, Profits, and Investment," NBER Working Papers 7207, National Bureau of Economic Research, Inc.
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  4. Rzonca, Andrzej & Cizkowicz, Piotr, 2005. "Non-Keynesian effects of fiscal contraction in new member states," Working Paper Series 0519, European Central Bank.
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  6. Alberto Alesina & Roberto Perotti, 1996. "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects," NBER Working Papers 5730, National Bureau of Economic Research, Inc.
  7. Alberto Alesina & Roberto Perotti & José Tavares, 1998. "The Political Economy of Fiscal Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 197-266.
  8. Sanjeev Gupta & Luc Leruth & Luiz de Mello & Shamit Chakravarti, 2003. "Transition Economies: How Appropriate is the Size and Scope of Government?," Comparative Economic Studies, Palgrave Macmillan, vol. 45(4), pages 554-576, December.
  9. Catriona Purfield, 2003. "Fiscal Adjustment in Transition Countries; Evidence From the 1990's," IMF Working Papers 03/36, International Monetary Fund.
  10. Loungani, Prakash & Sheets, Nathan, 1997. "Central Bank Independence, Inflation, and Growth in Transition Economies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 381-99, August.
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  12. André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
  13. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," NBER Working Papers 7664, National Bureau of Economic Research, Inc.
  14. Ricardo Hausmann & Lant Pritchett & Dani Rodrik, 2004. "Growth Accelerations," NBER Working Papers 10566, National Bureau of Economic Research, Inc.
  15. Sanjeev Gupta & Emanuele Baldacci & Benedict Clements & Erwin R. Tiongson, 2005. "What sustains fiscal consolidations in emerging market countries?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(4), pages 307-321.
  16. Kevin C. Cheng, 2003. "Growth and Recovery in Mongolia During Transition," IMF Working Papers 03/217, International Monetary Fund.
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  18. International Monetary Fund, 2000. "Institutions Matter in Transition, But so do Policies," IMF Working Papers 00/70, International Monetary Fund.
  19. Robert F. Westcott & C. John McDermott, 1996. "An Empirical Analysis of Fiscal Adjustments," IMF Working Papers 96/59, International Monetary Fund.
  20. C. John McDermott & Robert F. Wescott, 1996. "An Empirical Analysis of Fiscal Adjustments," IMF Staff Papers, Palgrave Macmillan, vol. 43(4), pages 725-753, December.
  21. Torsten Sløk & Sanja Kalra, 1999. "Inflation and Growth in Transition; Are the Asian Economies Different?," IMF Working Papers 99/118, International Monetary Fund.
  22. MERLEVEDE, Bruno, 2003. "Reform reversals and output growth in transition economies," Working Papers 2003013, University of Antwerp, Faculty of Applied Economics.
  23. Ardagna, Silvia & Alesina, Alberto, 1998. "Tales of Fiscal Adjustment," Scholarly Articles 2579822, Harvard University Department of Economics.
  24. Adam, Christopher S. & Bevan, David L., 2005. "Fiscal deficits and growth in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 571-597, April.
  25. 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.
  26. Sachs, Jeffrey D, 1996. "Economic Transition and the Exchange-Rate Regime," American Economic Review, American Economic Association, vol. 86(2), pages 147-52, May.
  27. repec:imf:imfwpa:02/64 is not listed on IDEAS
  28. Gupta, Sanjeev & Clements, Benedict & Baldacci, Emanuele & Mulas-Granados, Carlos, 2005. "Fiscal policy, expenditure composition, and growth in low-income countries," Journal of International Money and Finance, Elsevier, vol. 24(3), pages 441-463, April.
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  30. Peter Doyle & Peter F. Christoffersen, 1998. "From Inflation to Growth; Eight Years of Transition," IMF Working Papers 98/100, International Monetary Fund.
  31. Alesina, Alberto Francesco & Perotti, Roberto & Tavares, Jose, 1998. "The Political Economy of Fiscal Adjustments," Scholarly Articles 12553724, Harvard University Department of Economics.
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  33. Fischer, Stanley & Sahay, Ratna & Vegh, Carlos A, 1996. "Economies in Transition: The Beginnings of Growth," American Economic Review, American Economic Association, vol. 86(2), pages 229-33, May.
  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.
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  36. 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.
  37. Ashoka Mody & Ratna Sahay & Thomas Helbling, 2004. "Debt Accumulation in the CIS-7 Countries; Bad Luck, Bad Policies, or Bad Advice," IMF Working Papers 04/93, International Monetary Fund.
  38. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
  39. Brunetti, Aymo & Kisunko, Gregory & Weder, Beatrice, 1997. "Institutions in transition : reliability of rules and economic performance in former Socialist countries," Policy Research Working Paper Series 1809, The World Bank.
  40. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
  41. Selowsky, Marcelo & Martin, Ricardo, 1997. "Policy Performance and Output Growth in the Transition Economies," American Economic Review, American Economic Association, vol. 87(2), pages 349-53, May.
  42. Ernesto Hernández-Catá, 1997. "Liberalization and the Behavior of Output During the Transition From Plan to Market," IMF Working Papers 97/53, International Monetary Fund.
  43. Ernesto Hernández-Catá, 1997. "Liberalization and the Behavior of Output during the Transition from Plan to Market," IMF Staff Papers, Palgrave Macmillan, vol. 44(4), pages 405-429, December.
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