Working Paper: CEPR ID: DP943
Authors: Gerard Roland
Abstract: This paper trys to clarify the political economy arguments underlying the big bang and the gradualist approach to economic transition. The big bang approach emphasizes the importance of windows of opportunity when ex ante political constraints are less binding, whereas gradualist programmes are defended because of their higher ex ante political feasibility. Both approaches aim at achieving irreversibility, but through different means. The big bang approach emphasizes how speed in reforms may constrain a successor government, whereas the gradualist approach tries to design the sequencing of reforms so as to build, at each stage of transition, constituencies for further reform.
Keywords: transition; sequencing; political economy; Eastern Europe
JEL Codes: H89; P50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ex ante political constraints (D72) | compromises or delays in radical reform programs (P11) |
| big bang approach (O36) | increase in costs of reversing policies (E65) |
| rapid reforms (P21) | future government actions (H11) |
| gradualist approach (B52) | establishment of constituencies for future reforms (D72) |
| gradualism (O40) | reduces costs of early reform reversals (D61) |