Restructuring and Capital Accumulation in Transition Economies: A General Equilibrium Perspective
CEPR Discussion Paper No. 1372
Posted: 31 Oct 1997
Date Written: April 1996
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: Suggested Citation