Working Paper: CEPR ID: DP559
Authors: Richard Portes
Abstract: This paper is the Introduction to a special issue of European Economy on `The Path of Reform in Central and Eastern Europe'. It discusses the sources of the current wave of `Europessimism': exogenous shocks, adjustment costs, sequencing errors, and other policy errors. This analysis may help in assessing the extent to which we are observing a `J-Curve' phenomenon. The paper then considers some key topics in the strategy of reformers: (i) establishing a regime change; (ii) the order, speed and robustness of the chosen sequence of reforms; (iii) the institutional framework and the behaviour of firms; (iv) financial restructuring; (v) nominal and real anchors; (vi) convertibility and exchange rate policy; (vii) trade and debt.
Keywords: Economic Reform; Eastern Europe; Regime Change; Sequencing of Reforms
JEL Codes: N34; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regime Change (P39) | Economic Performance (P17) |
| Sequencing of Reforms (D78) | Credibility in Reform Programs (I28) |
| External Shocks (F41) | Investment (G31) |
| External Shocks (F41) | Economic Stability (E64) |
| Banks (G21) | Capital Markets (G19) |
| Initial Conditions (Y20) | Reform Outcomes (H19) |