U sing survey data from 28 transition countries, we test for the complementarity and substitutability of market-relevant skills and institutions. We show that democracy and good governance complement market skills in transition economies. Under autocracy and weak governance institutions, there is no significant difference in support for revising privatization between high-and low-skilled respondents. As the level of democracy and the quality of governance increases, the difference in the level of support for revising privatization between the high and low skilled grows dramatically. This finding contributes to our understanding of microfoundations of the politics of economic reform.

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A 2006 survey of 28,000 individuals in 28 post-communist countries reveals overwhelming support for revising privatization, but also that most respondents prefer to leave firms in private hands. We test whether individuals support revising privatization primarily due to a preference for state property or due to concerns about the legitimacy of privatization. We find that a lack of human capital and privately owned assets affects the support for revising privatization primarily via a preference for state property over private property; whereas transition-related hardships influence support for revising privatization via both a preference for state property and concerns about the illegitimacy of privatization. These results suggest the value of analyses that not only link respondent traits with support for policy, but that also probe the motivations that underpin this support.

Dissertation zur Erlangung des akademischen Grades CompendiumThis PhD dissertation addresses in a sequence of five essays the question how fiscal policy and economic output are interrelated in emerging Europe and how this relationship is shaped by the respective politico-economic environment and the individual-level support for economic reforms. Four out of these five papers have already been published. They are reprinted in this dissertation in the format of the respective journal version. Reprint permissions have been granted by the publishers. This compendium sets the stage and motivates in Section 1.1 the just mentioned research question in the light of the developments during the 2008-09 so-called "Great Recession" (attributed to Paul Krugman). Section 1.2 outlines the various dimensions of the underlying analytical debate, from which the structure of the five essays has been derived, summarizes the main findings and emphasizes the value added of the research provided in each essay in comparison to existing studies. Fiscal Policy and the Great RecessionAlready before the Great Recession an intensive analytical debate on the macroeconomic impact of fiscal policy had emerged in Europe. At that time the structural composition of fiscal policies and the appropriate design of budgetary reforms in the light of aging societies dominated the debate. For instance, the so-called "Lisbon Strategy" aimed to improve economic performance within the European Union (EU) and assigned public finances an important role to enhance employment and economic growth (see http://ec.europa.eu/archives/growthandjobs_2009).The Great Recession has then sparked renewed interest in fiscal policy. The extraordinary intensity of the downturn forced the implementation of sizable fiscal stimulus packages at the beginning of the crisis. Headline fiscal positions strongly deteriorated (not only due to discretionary fiscal expansion but also, if not mainly, due to the operation of automatic stabilizers). A few EU countries, especially those that had maintained elevated public debt levels already in 2008, experienced severe sovereign solvency pressures in 2010. These problems heralded a new stage of the crisis, during which the original private sector solvency problems eventually spilled over to the public sector. As a consequence, all EU countries are currently confronted with the challenge to implement decisive fiscal action to consolidate their budgets, a process that will have to continue in most countries until 2012-13.The Great Recession posed also demanding challenges for an appropriate fiscal policy reaction in emerging Europe -a region where for the first time since the start of transition in the early 1990s the capacities of public finance systems were put under real pressure. Europe (CESEE) 1 were severely hit by the crisis -though quite heterogeneously: while Poland is the only EU country whose economy continued to grow, the three Baltic countries experienced a double-digit decline of real GDP, amounting in Latvia to as much as 18 % i...

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We propose a dynamic factor model with time-varying parameters and stochastic volatility to analyze the relationship between global factors and country-specific capital flow dynamics. Studying a global sample of 43 countries from 1994 until 2015, we show that global co-movement of macroeconomic, financial and capital flow variables can explain a major share of country-specific capital flow volatility and that the impact of these variables has become even more important since the 2008-2009 global financial crisis. Our results indicate that country-specific changes in capital flows are strongly affected by fluctuations in global financial cycles and-to some extent-by global real business cycles. There is some evidence that countries with higher foreign exchange reserves, flexible exchange rates, lower public indebtedness or more developed domestic stock markets may better shield themselves from the global financial cycle.