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Markets wanted: expectation overshooting in transition economies

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  • Frank Neher

Abstract

This paper analyzes and compares individual beliefs about the effects of competition and the evolution of those beliefs over time in transition economies and experienced market economies. At the onset of transition, competition beliefs in transition countries are far more positive than in experienced market economies. Over time, this difference vanishes and competition beliefs converge. It is argued that overly optimistic competition beliefs in transition countries contributed to the possibility of implementing far-reaching pro-market reforms. It is shown that competition beliefs positively affect support for economic reform. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Frank Neher, 2013. "Markets wanted: expectation overshooting in transition economies," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(2), pages 187-219, June.
    • Handle: RePEc:spr:inrvec:v:60:y:2013:i:2:p:187-219
    DOI: 10.1007/s12232-012-0169-6
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    Cited by:

    1. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-168, Spring.
    2. repec:hal:spmain:info:hdl:2441/7fst0pcf5j8cr99e1nuobt97rn is not listed on IDEAS
    3. repec:spo:wpmain:info:hdl:2441/7fst0pcf5j8cr99e1nuobt97rn is not listed on IDEAS

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    More about this item

    Keywords

    Beliefs; Convergence; Public support; Reform; Signaling; D72; D83; P5;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems

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