CONTENTS ivThis Occasional Paper analyzes the experience of countries that have implemented very sizable fiscal adjustments over the past three decades. It aims to identify key conditions and institutional approaches that have contributed to sustained outcomes and to favorable macroeconomic developments.
Over the past decade, we have experienced what is arguably one of the largest economic experiments of this century. Many of the socialist countries that had a centrally planned economy embarked in a process of change aimed at transforming them into market economies. This transformation involved massive changes across a broad spectrum of economic policies, institutions and practices. For the transition process to be complete, countries will need to develop the institutions that are necessary for private markets to operate successfully and establish a government role that is complementary rather than adversary to a market economy. This paper focuses on the role that public finance has played in the transition process and on the progress made in creating the fiscal institutions that are essential for the proper functioning of a market economy.
JEL classifications : P20, P21
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