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Welfare against growth gains in post-transition countries: What are the consequences for stability?

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  • Lissowska, Maria

Abstract

This paper discusses the underpinnings of the financial crisis of the last decade. It explores the endogenous reasons of this crisis, and in particular a possible link between delayed and unequal growth of household incomes in post-transition countries on one hand and the instability of their growth and depth of recession after the financial crisis on the other. It indicates possible microeconomic factors under-pinning rapidly growing indebtedness of households, enabling faster consumption growth, but subject to fluctuations. It claims also that artificially boosted growth of consumption and a favourable proportion between wages and profits could attract investment (also FDI), possibly searching for short-term gains. It underlines that the inflow of financial funds contributed to, but did not cause instability growth in this region.

Suggested Citation

  • Lissowska, Maria, 2012. "Welfare against growth gains in post-transition countries: What are the consequences for stability?," Economics Discussion Papers 2012-65, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201265
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    More about this item

    Keywords

    Welfare; labour market; post-transition economies; stability;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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