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Investment in Post-communist Economies. Real Facts and Keynesian Myths

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  • Jacek Rostowski

Abstract

If official statistics are to be believed, the fall in output in the transition economies of Central and Eastern Europe has probably been the largest anywhere in peacetime in modern history (failed harvests could cause even larger falls in agricultural societies, and such effects were felt on a national level as late as 1854 in Ireland). This fall in output was certainly noticeably larger than that which occurred during the Great Depression of the 1930s (compare Tables 7 and 8-10), although it was smaller than that during World War II in countries which served as battlegrounds (France in 1944, Germany and Japan in 1945). It is therefore important to know what the cause of the post-Communist depressions was. Two main explanations have been put forward, the first posits a sharp reduction in the level of aggregate demand as the cause, the second suggests a dramatic change in the structure of demand, to which supply was unable to respond sufficiently rapidly.

Suggested Citation

  • Jacek Rostowski, 1995. "Investment in Post-communist Economies. Real Facts and Keynesian Myths," CASE Network Studies and Analyses 0063, CASE-Center for Social and Economic Research.
    • Handle: RePEc:sec:cnstan:0063
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    1. repec:bla:econom:v:59:y:1992:i:236:p:383-401 is not listed on IDEAS
    2. Eduardo Borensztein & Dimitri G. Demekas & Jonathan D. Ostry, 1993. "An Empirical Analysis of the Output Declines in Three Eastern European Countries," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 1-31, March.
    3. J Rostowski, 1993. "The Implications of Rapid Private Sector Growth in Poland," CEP Discussion Papers dp0159, Centre for Economic Performance, LSE.
    4. Finn E. Kydland & Edward C. Prescott, 1990. "Business cycles: real facts and a monetary myth," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 14(Spr), pages 3-18.
    5. Mr. Jonathan David Ostry & Mr. Eduardo Borensztein, 1992. "Structural and Macroeconomic Determinants of the Output Decline in Poland: 1990-91," IMF Working Papers 1992/086, International Monetary Fund.
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    Cited by:

    1. Thierry Verdier & Carlos Winograd, 1998. "Privatisation de masse et macroéconomie : un modèle théorique d'une petite économie ouverte," Revue Économique, Programme National Persée, vol. 49(1), pages 257-275.
    2. Giovanni Andrea Cornia & Juha Honkkila & Renato Paniccià & Vladimir Popov, 1996. "Long-Term Growth and Welfare in Transitional Economies: The Impact of Demographic, Investment and Social Policy Changes," WIDER Working Paper Series wp-1996-122, World Institute for Development Economic Research (UNU-WIDER).

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