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Trade in quality goods, trading regimes and unemployment in transition economies1

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  • Thomas Moutos

Abstract

One of the most important consequences of the transition in Central and Eastern Europe (CEE) has been the dismantling of the Council for Mutual Economic Assistance (CMEA). It is argued in this paper that the abrupt loss of trading partners for the former CMEA countries and the Newly Independent States (NIS) are partly responsible for the ensuing contraction of output and the emergence of unemployment. A model in which trade is conducted in vertically‐differentiated products is constructed with the implication that the dismantling of ‘clearing trade’arrangements among CMEA countries may make unemployment more than just a short‐term phenomenon.

Suggested Citation

  • Thomas Moutos, 1998. "Trade in quality goods, trading regimes and unemployment in transition economies1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 397-408, November.
    • Handle: RePEc:bla:etrans:v:6:y:1998:i:2:p:397-408
    DOI: 10.1111/j.1468-0351.1998.tb00056.x
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    References listed on IDEAS

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    1. Casella, Alessandra & Rauch, James E., 2002. "Anonymous market and group ties in international trade," Journal of International Economics, Elsevier, vol. 58(1), pages 19-47, October.
    2. Dani Rodrik, 1992. "Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates," NBER Working Papers 4112, National Bureau of Economic Research, Inc.
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