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Gradualism versus Big Bang: Evidence from Transition Countries







This paper uses previous empirical work to simulate the impact on real economic growth of the big bang and gradualist approaches to reform. Uncertainty concerning the appropriate reform steps introduces the possibility of reform reversals. We find that higher expected probabilities of reversal make policymakers more likely to opt for gradualism. Even relatively small probabilities are su.cient to tilt the balance in favour of gradualism. This is reinforced by shortsightedness of policymakers that follows from standard political cycles, but may be moderated by voter myopia.

Suggested Citation

  • B. Merlevede & K. Schoors, 2004. "Gradualism versus Big Bang: Evidence from Transition Countries," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/243, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:04/243

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    References listed on IDEAS

    1. Stern, David I. & Common, Michael S., 2001. "Is There an Environmental Kuznets Curve for Sulfur?," Journal of Environmental Economics and Management, Elsevier, vol. 41(2), pages 162-178, March.
    2. Junsoo Lee & John List, 2004. "Examining Trends of Criteria Air Pollutants: Are the Effects of Governmental Intervention Transitory?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 21-37, September.
    3. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    4. Holtz-Eakin, Douglas & Selden, Thomas M., 1995. "Stoking the fires? CO2 emissions and economic growth," Journal of Public Economics, Elsevier, vol. 57(1), pages 85-101, May.
    5. Stern , David I., 1998. "Progress on the environmental Kuznets curve?," Environment and Development Economics, Cambridge University Press, vol. 3(02), pages 173-196, May.
    6. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 353-377.
    7. William T. Harbaugh & Arik Levinson & David Molloy Wilson, 2002. "Reexamining The Empirical Evidence For An Environmental Kuznets Curve," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 541-551, August.
    8. Roger Perman & David I. Stern, 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 325-347, September.
    9. Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-773, Supplemen.
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    More about this item


    policy reform; gradualism; big bang;

    JEL classification:

    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

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