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Stabilization and growth in transition economies: The early experience

Stanley Fischer, Ratna Sahay and Carlos Vegh ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the growth and stabilization experience in 26 transition economies in eastern Europe, the former Soviet Union, and Mongolia for the period 1989-1994. Inflation rates have declined significantly in most countries following an inflation stabilization program. Growth resumes after stabilization occurs, typically with a lag of about two years. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation, and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms.

Keywords: Transition; Eastern Europe; growth; reforms; stabilization; inflation; fixed exchange rates (search for similar items in EconPapers)
JEL-codes: P20 F41 F43 (search for similar items in EconPapers)
Date: 1996-04
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Related works:
Journal Article: Stabilization and Growth in Transition Economies: The Early Experience (1997)
Journal Article: Stabilization and Growth in Transition Economies: The Early Experience (1996) Downloads
Working Paper: Stabilization and Growth in Transition Economies; The Early Experience (1996) Downloads
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