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Macropolicies in transition to a market economy : a three-year perspective (English)

Countries in transition to market economies have had to implement macroeconoimic stabilization programs at the same time that they were engaged in massive changes of their political institutions and the systemic framework of their economies. What has been the interaction of stabilization with economic liberalization and deep institutional reform in the countries of Eastern Europe, in particular, the relations among initial conditions, political developments, reform strategies, and outcomes? Experience in Eastern Europe suggests that when there is a political breakthrough (as in the countries under review) a radical stabilization-liberalization stragety is probably the least risky approach to reform and will not constrain output or structural reform over the medium term. Even stabilization that is initially successful in containing inflation will later come under pressure because of social policies and the structural transitions impelled by reform. Several factors are identified that affect the credibility of reforms, and lessons are derived for countries that have stabilized and those that yet face this task.


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    Balcerowicz, Leszek Gelb, Alan

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    Europe and Central Asia,

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    Europe and Central Asia,

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    Macropolicies in transition to a market economy : a three-year perspective

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    exchange rate;Exchange Rates;inflation;negative real interest rate;increase in interest rate;real per capita income;real effective exchange rate;ratio of government spending;real exchange rate movement;relative price;fiscal deficit;foreign exchange market;Private Sector Growth;countries in transition;current account deficit;exchange rate unification;privatization of state;hard budget constraint;political development;foreign exchange deposit;exchange rate management;institutional change;price liberalization;Macroeconomic Policy;radical reform;state enterprises;distribution of wealth;foreign exchange convertibility;consumer price index;purchasing power parity;foreign exchange crisis;minister of finance;trade union movement;foreign direct investment;debt service burden;state enterprise sector;external debt service;large interest rate;size of industry;decentralization of management;interest rate adjustment;heavily indebted country;parallel exchange market;liberalization of prices;demand for good;gross domestic product;slow population growth;social protection system;private property right;price of energy;decline in inflation;composition of output;credit to enterprise;competitive market economy;trade and services;stock of debt;loss of credibility;net domestic credit;restrictions on trade;interest rate policy;balance of payment;commercial real estate;reformed tax system;domestic financial assets;exchange rate peg;lack of autonomy;interest rate target;state enterprise managers;lack of credibility;nominal interest rate;elimination of subsidy;profit tax revenue;cost of provision;foreign debt;wage control;Stabilization policies;stabilization program;liberalization policy;private economy;price control;monetary policy;banking system;Macroeconomic Stability;initial price;real rate;supply response;stabilization problem;price level;fiscal cost;statistical system;Fiscal policies;resource transfer;Fiscal Sustainability;administered price;political transition;foreign trade;fiscal policy;fiscal balance;Bank Credit;state sector;inflationary expectation;macroeconomic stabilization;parliamentary election;transition economy;Transition economies;external factor;price system;inflation rate;tax receipt;corporate governance;fiscal revenue;industrial producer;consumer subsidy;political instability;fiscal imbalance;subsidized credit;retirement age;government deficit;macroeconomic situation;retained earnings;measure output;inflationary process;fiscal subsidy;Fiscal Reform;hidden unemployment;consumer durable;transition countries;transition country;fiscal expenditure;deposit rate;banking sector;fundamental changes;Financial Sector;borrowing rate;monetary restraint;macroeconomic problem;social transfer;inflationary pressure;older generations;high inflation;labor movement;stabilization effort;Labor Market;external balance;turnover tax;labor redundancy;transition program;welfare gains;animal fodder;Job Creation;cross-border transaction;political framework;government expenditure;cut expenditures;stabilizing economy;tax incentive;payroll tax;statistical data;medium-term perspective;political elite;wage tax;high premium;fiscal spending;social spending;Political Economy;registered unemployment;output recovery;supply shock;cross-country comparison;net pay;leased assets;state industry;expenditure program;loan portfolio;financial system;financial constraint;hard currency;intergenerational equity;loan quality;financial reform;macroeconomic adjustment;state control;benefit system;demographic factor;perverse incentives;minimum wage;average pension;early retirement;special regime;state pension;dependency ratio;financial policies;fiscal resource;foreign language;quality improvement;nominal anchor;Socialist countries;fiscal budget;Socialist economies;trade datum;bank profits;equilibrium distribution;unemployment benefit;income transfer;household saving;domestic asset;political factor;opposition party;liberalization program;reform package;economic reform;longer period



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Balcerowicz, Leszek Gelb, Alan

Macropolicies in transition to a market economy : a three-year perspective (English). Washington, D.C. : World Bank Group.