All post‐socialist countries began the transition process towards a market economy with very high shares of public expenditures in their gross domestic product. The policy question these countries face is whether to decrease the public expenditure rate (PER), and if so, to what level. Another question is whether the change in the PER will affect their economic growth perspectives. Seeks to answer these questions. Discusses the theoretical relation between PER and the rate of economic growth, defines growth neutral public expenditure rate and estimates it empirically. Assesses the empirical relationship between PER and economic growth rate in a cross‐country analysis, and presents findings that economic growth in the cross‐country analysis cannot be explained by the public expenditure rate, nor by the deviations from growth neutral PER.
Looking back on the experience of transition, based on the case study of Slovenia, this article argues that the transformation of the labour market was a major area of transition. It therefore focuses on the topic of the relationship between output, employment, unemployment and inactivity of labour in a transition country. The transition period is from 1980 to 2006. The averages for the whole period 1980-2006 conceal too much. The whole transition period is divided into two sub-periods: the period of the transition crisis and the period of transitional rehabilitation. The thesis is that there were important differences between the two sub-periods as far as the labour market is concerned. Okun's relationships about the responses of employment and unemployment to output changes are valid during both sub-periods. Empirical estimates of the Beveridge relationship and job-matching function do not differ significantly for the first period compared with the second. The conclusion would be that the labour market responded normally during the transition and that the official statistical data do not reflect major systemic changes that the labour market has supposedly experienced during transition.
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