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

Author

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  • Castanheira, Micael
  • Roland, Gérard

Abstract

This paper adresses 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, occurring 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.

Suggested Citation

  • Castanheira, Micael & Roland, Gérard, 1996. "Restructuring and Capital Accumulation in Transition Economies: A General Equilibrium Perspective," CEPR Discussion Papers 1372, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1372
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    Citations

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    Cited by:

    1. Grafe, Clemens & Wyplosz, Charles, 1997. "The Real Exchange Rate in Transition Economies," CEPR Discussion Papers 1773, C.E.P.R. Discussion Papers.
    2. Daniel Piazolo, 2001. "Investment behaviour in transition countries and computable general equilibrium models," Applied Economics, Taylor & Francis Journals, vol. 33(7), pages 829-837.
    3. Bai, Chong-En & Li, David D. & Tao, Zhigang & Wang, Yijiang, 2000. "A Multitask Theory of State Enterprise Reform," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 716-738, December.
    4. Norbert Wunner, 1998. "Trade liberalization and political support in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 409-425, November.
    5. Randolph Luca Bruno, 2003. "Speed of Transition, Unemployment Dynamics and Nonemployment Policies: Evidence from the Visegrad Countries," LEM Papers Series 2003/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    Eastern Europe; Investment; Restructuring; Speed of Transition; Transitional Dynamics;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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