Political Economy of Crisis Management in East-Central European Countries
Europe-Asia Studies, 65(3), 2013, 383–410.
39 Pages Posted: 4 Mar 2014
Date Written: January 1, 2013
This paper analyses policy responses to the financial and economic crisis in the central east European countries. The crisis raised the profile of economic policy themes that relate to the role of taxation and state spending. The key policy differences related to public budgets and support for a demand stimulus. Responses fall broadly into two categories that we link to a social-democratic and a neo-liberal response. The distinction indicates that the policy responses were linked to the party affiliation of the government on the left-right spectrum. There were some remarkable common trends that cannot be explained by the logical requirements of the economic situation alone. There are differences in timing and in severity, but every country has gone towards the budget-balance-by-cuts road at some point. In all cases there were cuts in benefits for marginal groups in society and a switch towards indirect rather than direct taxes: these carry clear distributional implications.
Keywords: transition economies, economic policy
JEL Classification: E6
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