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Political Determinants of Economic Reforms in the Post-Communist Transition Countries

  • Staehr, Karsten
  • Tamazian, Artur
  • Vadlamannati, Krishna Chaitanya

This paper examines how political institutions and electoral outcomes have affected the economic reform process in the post-communist transition countries. Panel data estimations on annual data for 26 transition economies from 1992 to 2006 suggest that the institutional structure of the economy has been of importance, at least for the western-most transition countries. Democratisation and a relatively short exposure to communist rule have been conducive to economic reform, while the timing of elections and whether the government commands a majority in parliament appear to have been unimportant. Governments with right-wing ideology have implemented more market-economic reforms than governments with other ideologies. A high development level but also high inflation have proved conducive to reforms, while unemployment has had the opposite effect.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15960.

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Date of creation: 01 May 2009
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Handle: RePEc:pra:mprapa:15960
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  1. Hayo, Bernd, 2004. "Public support for creating a market economy in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 720-744, December.
  2. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  3. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
  4. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  5. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  6. Grossman, Herschel I & Kim, Minseong, 1996. " Predation and Accumulation," Journal of Economic Growth, Springer, vol. 1(3), pages 333-50, September.
  7. G�rard Roland, 2002. "The Political Economy of Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 29-50, Winter.
  8. Dewatripont, M & Roland, G, 1992. "Economic Reform and Dynamic Political Constraints," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 703-30, October.
  9. Karsten Staehr, 2006. "Linkages between Political and Economic Reforms in Post-Communist Countries," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 32, pages 113-138.
  10. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
  11. Haggard, Stephan & Webb, Steven B, 1993. "What Do We Know about the Political Economy of Economic Policy Reform?," World Bank Research Observer, World Bank Group, vol. 8(2), pages 143-68, July.
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