Working Paper: CEPR ID: DP3246
Authors: Nauro F. Campos; Fabrizio Coricelli
Abstract: This essay surveys macroeconomic issues that marked the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. We first establish a set of stylized facts of the transition so far, namely: (1) output fell, (2) capital shrank, (3) labour moved, (4) trade reoriented, (5) the structure changed, (6) institutions collapsed, and (7) the transition costs. We then critically survey the theoretical literature on transition, discussing various explanations for the initial output fall as well as medium term issues, such as optimal speed of transition, disorganization, institutions and sectoral reallocation as a source of output dynamics. Last, we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts. The essay concludes with a succinct list of suggestions for future research.
Keywords: Central and Eastern Europe; Former Soviet Union; Growth; Stylized Facts; Transition
JEL Codes: O11; O40; P20; P23; P24; P30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial output fall (Y20) | economic performance (P17) |
| initial conditions (C62) | economic performance (P17) |
| labor movement (J51) | unemployment rates (J64) |
| labor movement (J51) | shifts from state-owned to private sectors (P31) |
| trade reorientation (F14) | economic performance (P17) |
| institutional collapse (O17) | economic performance (P17) |
| transition costs (P39) | poverty and inequality (I32) |