Evaluating Government Policy in Transition Countries
32 Pages Posted: 9 Aug 2009 Last revised: 9 Feb 2010
Date Written: 1999
The paper examines neoclassical measures to evaluate government policy in transition countries: 1) marginal factor prices and the return to capital, 2) growth rates and taxes, 3) inflation rates, and 4) debt/GDP ratios, related to international real business cycle and endogenous growth theory. It further postulates a way to consider the debt/equity position of the government, related to a risk-yield framework. This gives a potentially more useful indicator than the debt/GDP ratio alone. Empirically these measures are examined in an illustrative way for a set of Central European countries plus Germany and the US for comparison, for the period of 1990-1998, using an internally standardized data set from the on-line International Financial Statistics.
Keywords: government policy, transition countries
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