Fiscal Constraints, Reform Strategies, and the Speed of Transition: The Case of Central-Eastern Europe

Fabrizio Coricelli ()

No 1339, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper analyses the pressures on the pace of reform that can arise through fiscal constraints. A simple analytical framework is used to illustrate the relation between the budget deficit and the pace of restructuring, unemployment, and the relative dynamics of state and private firms. It is shown that fiscal pressures become stronger while the transition progresses. Demands on governments to slow down restructuring mount, as well as demands for compensating transfers to groups affected by reforms. Thus governments face an important trade-off between fiscal targets and restructuring objectives. Together with pressures arising from increasing income inequality and lobbying from specific interest groups, such as pensioners, fiscal constraints have probably played a major role in the reform cycle observed in many Central and East European countries. They have been particularly influential in determining the asymmetry between economic and political cycles. An example of the changing speed of reforms is the continuing delay to privatization. More generally, the widespread electoral successes of parties originating from former communist organizations testify to the pressure to change the pace of reforms.

Keywords: Eastern Europe; Fiscal Constraints; Reform Dynamics; Restructuring; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 P20 (search for similar items in EconPapers)
Date: 1996-03
View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP1339.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:1339

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP1339.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().