Financing the Transition of Previously Centrally Planned Economies: Macroeconomic Effectson Western Europe

Steven Symansky and Leonardo Bartolini

No 1994/157, IMF Working Papers from International Monetary Fund

Abstract: Under alternative assumptions on the likely developments in external financing of PCPE transition, and based on a multi-country, forward-looking model that includes a simplified PCPE block, we simulate the response of PCPEs to a transfer of capital from the industrial countries, and assess the potential implications for Western Europe over the next ten years. Real interest rates in Western Europe are likely to experience only mild upward pressure, and most macroeconomic aggregates are likely to change by substantially smaller magnitudes than typical over the business cycle.

Keywords: WP; capital-importing country; financing effort; investment scenario; prototype capital-importing region; trade balance; PCPE model; import constraint; investment equation; transformation of Previously Centrally Planned Economies; PCPEs' investment; PCPEs' transition; import shock; investment relation counterpart; relation counterpart; Consumption; Capital flows; Imports; Exports; Loans; Western Europe; Eastern Europe (search for similar items in EconPapers)
Pages: 30
Date: 1994-12-01
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