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Transition in Eastern Europe: Current Issues and Perspectives
Beihefte der Konjunkturpolitik, Vol. 45
(1997)
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This publication contains a selection of papers presented at a conference discussing fundamental issues in the economics of transition, aspects of liberalization/privatization/stabilization and the experience of selected countries. The sessions lead to a number of hypotheses:- There is a need to analyze historical and economic aspects of phases of relative success of the socialist system of central planning- Next to the important role of distribution of personal incomes and wealth for the success of the transformation process, the question of "optimal change of personal income and wealth distribution" during the process of transformation has to be raised.- In assessing the costs and benefits of reform policies, any methodological approach should take into account an intertemporal perspective- How much does the EU continue protectionism against countries which will not become its members in the near future?- The role of the institutional environment shall not be neglected when analyzing the process of transition: financial markets e. g. are of great relevance for sound development.- An early status of independence for the central bank from public finance obligations appears to help to eliminate the monetary overhang.- A quick, almost instant liberalization strategy (countries of Central and Eastern Europe) seems to be more successful than gradual liberalization (Russia, Ukraine, Belarus) along with interventionism of trade policy.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Inhalt | 5 | ||
| Bernd Huber / Friedrich L. Sell: Introduction | 7 | ||
| Ulrich Blum: Greed and Grief in East Germany - the Socialist System's Crisis, Collapse and Transformation | 11 | ||
| 1. The rise and the decline of the CPE | 11 | ||
| 2. Scientific coverage and alternative paradigms | 12 | ||
| 2.1 Stylized facts | 12 | ||
| 2.2 Old institutional economics | 15 | ||
| 2.3 Functionalist economics | 17 | ||
| 2.4 New institutional economics | 18 | ||
| 2.5 Structuralist economics | 19 | ||
| 2.6 Synthesis | 20 | ||
| 3. Games among supervisors | 20 | ||
| 3.1 The principal-agent background | 20 | ||
| 3.2 Description of the model | 22 | ||
| 3.3 Structure of the model | 23 | ||
| 3.3.1 Summary of outcomes | 23 | ||
| 3.3.2 The chicken game | 24 | ||
| 3.3.3 The social optimum | 25 | ||
| 3.3.4 The prisoners' dilemma | 25 | ||
| 3.4 Declining reward and economic decay | 26 | ||
| 4. Conclusion | 28 | ||
| Abstract | 29 | ||
| References | 30 | ||
| Henning Klodt: Comment on: Ulrich Blum, Greed and Grief in East Germany - the Socialist System's Crisis, Collapse and Transformation | 35 | ||
| References | 37 | ||
| Klaus-Dieter Schmidt: Transition in Eastern Europe: The Integration of Goods and Factor Markets into the World Economy | 39 | ||
| 1. Introduction: economic opening-up, trade reorientation and industrial restructuring | 39 | ||
| 2. Theoretical background: routes towards integration | 41 | ||
| 2.1 Shallow versus deep integration | 41 | ||
| 2.2 Economic versus political integration | 42 | ||
| 3. Stylized facts: patterns of economic integration | 43 | ||
| 3.1 Comparative advantages and trade reorientation | 44 | ||
| 3.2 Capital import and trade performance | 50 | ||
| 3.3 Wage differentials and migration | 58 | ||
| 4. Evaluation: competitiveness and exchange rates | 59 | ||
| 5. Policy conclusions: which sort of integration? | 61 | ||
| Abstract | 62 | ||
| References | 63 | ||
| Markus Mende: Comment on: Klaus-Dieter Schmidt, Transition in Eastern Europe: The Integration of Goods and Factor Markets into the World Economy | 67 | ||
| References | 70 | ||
| Bas van Aarle: Currency Substitution and Currency Controls: the Polish "Big Bang" of 1990 | 71 | ||
| 1. Introduction | 71 | ||
| 2. A small open economy with currency substitution | 75 | ||
| 2.1 Seigniorage maximization | 79 | ||
| 2.2 Efficient taxation | 81 | ||
| 3. Currency controls | 81 | ||
| 4. Empirical investigation of currency substitution and currency controls: the polish big bang of 1990 | 83 | ||
| 5. Conclusion | 88 | ||
| Appendix A | 89 | ||
| Abstract | 91 | ||
| References | 91 | ||
| Nina Budina / Sweder van Wijnbergen: Debt Management and Inflation Stabilization in Bulgaria | 93 | ||
| 1. Introduction | 93 | ||
| 2. Fiscal deficit and inflation in Bulgaria | 94 | ||
| Inflation and deficit financing | 94 | ||
| 3. Domestic debt management and inflation stabilization | 96 | ||
| 4. Foreign debt management and inflation stabilization | 101 | ||
| 4.1 Foreign debt reduction deal | 101 | ||
| 4.2 The impact of the foreign debt deal on inflation and fiscal deficits | 101 | ||
| 4.3 The impact of real exchange rate depreciation or raising the cost of foreign borrow | 106 | ||
| 4.4 Debt, money creation and the trade-off between current and future inflation | 107 | ||
| 5. Conclusions | 108 | ||
| Abstract | 108 | ||
| References | 109 | ||
| Clemens Fuest / Bernd Huber: Government Deficits, Inflation, and Economic Transition | 111 | ||
| 1. Introduction | 111 | ||
| 2. The performance of fiscal and monetary policies in transition | 112 | ||
| 2.1 Macroeconomic stabilisation and the budget deficit | 112 | ||
| 2.2 The role of the budget deficit in economies in transition | 115 | ||
| 3. Budget Deficits and Market Oriented Reforms | 117 | ||
| 4. The problem of excessive inflation | 122 | ||
| 4.1 Inflation and budget deficits | 122 | ||
| 4.2 The Model | 123 | ||
| 4.3 Inflation under credit rationing | 124 | ||
| 4.4 Inflation with short-term nominal debt | 125 | ||
| 4.5 Inflation with short-term and long-term nominal government debt | 128 | ||
| 5. Conclusions | 131 | ||
| Abstract | 132 | ||
| References | 132 | ||
| Dietmar Wallisch: Comment on: Clemens Fuest and Bernd Huber, Government deficits, inflation, and economic transition | 135 | ||
| Content | 135 | ||
| Comment | 137 | ||
| Johannes Bröcker / Bernd Raffelhiischen: Fiscal aspects of German unification: Who is stuck with the bill? | 139 | ||
| 1. Introduction | 139 | ||
| 2. The simulation model | 140 | ||
| 2.1 Household | 140 | ||
| 2.2 Firm | 143 | ||
| 2.3 Public sector | 146 | ||
| 3. Macroeconomic aspects and public finance in transition | 149 | ||
| 4. The catching-up process | 152 | ||
| 5. Summary | 160 | ||
| Abstract | 161 | ||
| References | 161 | ||
| Frank D. Weiss: Comment on: J. Bröcker and B. Raffelhüschen, Fiscal Aspects of German Unification: Who is Stuck with the Bill? | 163 | ||
| Antonin Rusek: Transition to Markets in CEFTA Countries. A Comparative Overview | 167 | ||
| 1. Introduction | 167 | ||
| 2. History: economic reforms and the initial transition policies | 169 | ||
| 2.1 The socialist past | 169 | ||
| 2.2 The beginning of the transition processes | 172 | ||
| 3. Toward modern market economies: 1992 - 1995 | 176 | ||
| 4. Future prospects | 182 | ||
| Abstract | 186 | ||
| References | 186 | ||
| Hubert Grabisch: Comment on: Antonin Rusek, Transition to Markets in CEFTA Counties | 189 | ||
| The course of macroeconomic events in the CEFTA countries | 189 | ||
| The role of CEFTA | 194 | ||
| References | 196 | ||
| Daniel Gros / Andrzej Gonciarz: Stabilization and Economic Reform in Russia, Ukraine and Belarus | 197 | ||
| 1. Introduction | 197 | ||
| 2. Structural distortions at the start | 198 | ||
| 3. Trice liberalization ... but what else?' | 200 | ||
| 4. Lack of adjustment in energy sector | 201 | ||
| 5. External liberalization | 204 | ||
| 5.1 Liberalization of international trade | 204 | ||
| 5.2 Export performance | 206 | ||
| 5.3 The foreign exchange market | 210 | ||
| 6. Macroeconomic destabilization | 211 | ||
| 7. Conclusions: consequences of non-reforming | 215 | ||
| Abstract | 216 | ||
| References | 216 | ||
| Rolf J. Langhammer: Comment on: Daniel Gros and Andrzej Gonciarz, Stabilization and Economic Reform in Russia, Ukraine and Belarus | 219 | ||
| Autorenverzeichnis | 223 |