Synthetic ‘Real Socialism’: A Counterfactual Analysis of Political and Economic Liberalizations

Ilaria Petrarca and Roberto Ricciuti

No 11/2014, Working Papers from University of Verona, Department of Economics

Abstract: We evaluate the effect of the 1989 shock over economic development in four Eastern European countries. We apply a counterfactual approach and define the shock alternatively as the trigger for economic openness, political competition, or both. The main result is an effect of economic freedom large than the one of democratization. In Poland and Bulgaria we find a positive impact of economic freedom, while in Bulgaria there is also a smaller effect of democratization. In Albania, after an initial recession, economic freedom helps recovery. Finally, Romania does not show any robust effect.

Keywords: economics of transition; synthetic control estimator; democratization; economic freedom. (search for similar items in EconPapers)
JEL-codes: C21 C23 O11 O43 P27 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-pol and nep-tra
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