Growth in Transition Countries: Big Bang versus Gradualism

Roberto Dell'Anno and Stefania Villa

No 122, CELPE Discussion Papers from CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy

Abstract: This paper analyses the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate big-bang versus gradualist approach. It builds a new indicator for the speed of transition reforms based on a three-way principal component analysis. It shows that: (i) the speed of transition reforms Granger-causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization program, also drive economic growth. While the first two results are robust to different estimators, the impact of control variables depends on the econometric specification.

Keywords: speed of transition; economic growth; three-way principal components analysis (search for similar items in EconPapers)
JEL-codes: C33 C82 P21 P24 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-11-14
New Economics Papers: this item is included in nep-fdg and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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