On the Speed of Transition Central Europe

Philippe Aghion and Olivier Blanchard

No 4736, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Transition in Central Europe is four years old. State firms which dominated the economy are struggling with market forces. A new private sector quickly emerged and has taken hold. Unemployment, which did not exist, is high and still increasing. Will this process of transition accelerate, or slow down? Will unemployment keep increasing? Can things go wrong and how? Our paper represents a first pass at answering those questions. The basic structure of the model we develop is standard, that of the transition from a low to a high productivity sector. But we pay attention to two aspects which strike us as important. The first is the interactions between unemployment and the decisions of both state and private firms. The second are the idiosyncracies which come from the central planning legacy, from the structure of control within state firms to the lack of many market institutions, which limits private sector growth. We start with a description of transition in Poland so far. We then develop a model and use it to think about the determinants of the speed of transition and the level of unemployment. Finally, we return to the role of policy and the future in Poland, as well as the causes of cross-Central European country variations.

JEL-codes: E1 O1 (search for similar items in EconPapers)
Date: 1994-05
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (240)

Published as Fischer, Stanley and Julio Rotemberg (eds.) NBER Macroeconomics Annual 1994. Cambridge: MIT Press, 1994.
Published as On the Speed of Transition in Central Europe , Philippe Aghion, Olivier Jean Blanchard. in NBER Macroeconomics Annual 1994, Volume 9 , Fischer and Rotemberg. 1994

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Related works:
Chapter: On the Speed of Transition in Central Europe (1994)
Working Paper: On the Speed of Transition in Central Europe (1994)
Working Paper: On the Speed of Transition in Central Europe (1993)
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