Restructuring and Capital Accumulation in Transition Economies: A General Equilibrium Perspective

CEPR Discussion Paper No. 1372

Posted: 31 Oct 1997

See all articles by Micael Castanheira

Micael Castanheira

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES); Centre for Economic Policy Research (CEPR)

Gérard Roland

University of California, Berkeley - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 1996

Abstract

The paper addresses the issue of the optimal speed of economy-wide restructuring from a state-owned to a privately-owned economy. The analysis is led from a general equilibrium perspective, focusing on the role of endogenously generated capital accumulation. Sensitivity of the optimal speed of transition is performed with respect to preferences and technology. It is found in particular that adverse productivity shocks to the state sector, occuring early on in transition tend to create macroeconomic contraction and slow down investment and the speed of transition. Such shocks tend to accelerate transition if they occur at a later stage, however. This may shed light on the effect of adverse productivity shocks on output contraction in the early phase of transition in Central and Eastern Europe.

JEL Classification: E21, E 61, P41, P51

Suggested Citation

Castanheira, Micael and Roland, Gérard, Restructuring and Capital Accumulation in Transition Economies: A General Equilibrium Perspective (April 1996). CEPR Discussion Paper No. 1372, Available at SSRN: https://ssrn.com/abstract=38043

Micael Castanheira

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
+32 2 650 4467 (Phone)
+32 2 650 3369 (Fax)

Centre for Economic Policy Research (CEPR)

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United Kingdom

Gérard Roland (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Berkeley, CA 94720-3880
United States
510-642-4321 (Phone)
510-642-6615 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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