Working Paper: CEPR ID: DP1616
Authors: Saul Estrin; Giovanni Urga
Abstract: In this paper we use unit roots/cointegration analysis and time-varying parameters procedures to test for a common growth path in the ex-communist block, both pre- and post-reform. We test whether there has been convergence within the block and between the block as a group and the West. Surprisingly, there is little evidence of convergence within the communist block, which brings into question the effectiveness of policies to reduce differentials in income per capita across the region under the communists. There is also little evidence of convergence with respect to the West, for the 1970?90 period and when the early years of reform are included (1970?95).
Keywords: growth models; transition economies; unit roots; time series test; Kalman filter
JEL Codes: C15; C22; C23; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Communist regimes' planning systems (P21) | Lack of convergence within the communist block and divergence in development levels post-reform (1990-1995) (P29) |
| Lack of convergence within the communist block and divergence in development levels post-reform (1990-1995) (P29) | Failure of socialist policies to achieve intended outcomes (P27) |
| Lack of convergence between the communist block and western economies during the same periods (P19) | Failure of socialist policies to achieve intended outcomes (P27) |
| Economic policies aimed at equalizing income levels were ineffective (F62) | Lack of convergence in output among transition economies (P29) |