Liberalization and the Behavior of Output During the Transition From Plan to Market

Abstract

This is a Working Paper and the author would welcome any comments on the present text. Citations should refer to a Working Paper of the Inlemalional Monetary Fund. The views expressed are those of the author and do not necessarily represent those of the Fund.

Privatization and output behavior during the transition: Methods matter!

“…Indeed, the estimator associated to ln(π) has the expected negative sign and is statistically different from zero across most specifications, though this effect is somewhat muted once we base our regression on transition time. The contemporaneous variable of liberalization is significant and has a negative sign, like Hernández-Catá (1997). It reflects the fact that the process of liberalization results into a large fall in output.…”

“…like Berg et al (1999), De Melo et al (1996), Falcetti et al (2002), Fischer et al (1996a, 1996b, Havrylyshyn et al (1998), Hernández-Catá (1997, Merlevede (2003) and ZES. Fischer et al (1996a, p. 232) and Havrylyshyn (2001, p. 74) explicitly say that as far as countries have not experienced enough reforms and macroeconomic stabilization, the neo-classical determinants of growth are not important and the basic economic growth equation like the one of Mankiw et al (1992) are not the adequate tool for transition economies.…”

“…6 Our main dependent variable is IGDP, an index of real GDP relative to 1989, so that the value for each country is 100 in 1989. Therefore, the index gives the degree of economic recovery by showing the percent of pretransition GDP attained in the year t , like Hernández-Catá (1997) and ZES. To construct this variable, we use annual GDP growth rates from EBRD (2002b).…”

“…Important contributions are, e.g.,Berg et al (1999),De Melo et al (1996), Falcetti et al (2002,Fischer et al (1996aFischer et al ( , 1996b,Havrylyshyn et al (1998) andHernández- Catá (1997).…”

The Transition Economies After Ten Years

“…These include DeMelo, Denizer, and Gelb (1996),Fischer, Sahay, and Végh (1996a,Sachs (1996a),Selowsky and Martin (1997),Aslund, Boone, and Johnson (1996),Hernández-Catá (1997), Havyrylyshyn, Izvorski, and Ron van Rooden (1998),Wolf (1997),Heybey and Murrell (1999),and Berg, Borensztein, Sahay, and Zettelmeyer (1999).26 Using a qualitatively different approach, this is supported by the findings of DeBroeck and Koen (1999). De Broeck and Koen account for the contribution of total factor productivity (TFP) and factor input in explaining the output performance in the 15 FSU countries.…”