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Great expectations: a tale of two transitions

Author

Listed:
  • Daniele Girardi

    (Department of Political Economy, King’s College London, London, UK; and Department of Economics, University of Massachusetts Amherst, USA)

  • Roberto Veneziani

    (School of Economics and Finance, Queen Mary University of London,)

  • Susanne Wengle

    (Department of Political Science, University of Notre Dame, South Bend, U.S.A.)

Abstract

Over a quarter of the world’s population lives in economies that have undertaken transitions from central planning to market economies. These transitions entail far-reaching and complex changes in social, economic and political institutions and have had widely divergent outcomes. Important strands of literature have emphasised the strategic complementarities that characterise the transition process in both the economic and political realms. Contrary to a widespread assumption, market-supporting institutions do not necessarily arise when assets are privatised in a highly unstable and uncertain environment; in fact, multiple equilibria emerge and expectations may play a key role in equilibrium selection. In this paper, we survey the vast empirical literature on transition economies in order to provide evidence on the correlation between expectations at the beginning of transition and success of the transition process. We provide the first comprehensive survey of the literature on agents’ subjective perceptions of transitions’ paths.

Suggested Citation

  • Daniele Girardi & Roberto Veneziani & Susanne Wengle, 2023. "Great expectations: a tale of two transitions," Working Papers 968, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:968
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/wp968.pdf
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    More about this item

    Keywords

    Transition; expectations; multiple equilibria; property rights.;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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