Ten Years of Transformation : Macroeconomic Lessons
After surveying the facts and distilling the voluminous literature on the transition to market economies, the author arrives at several conclusions: with hindsight, the old debate - Big Bang versus gradualism - was really a problem of feasibility,...
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| Format: | Working Paper |
| Language: | English Spanish / Castilian |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/02/438332/ten-years-transformation-macroeconomic-lessons http://hdl.handle.net/10986/22337 |
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okr-10986-22337 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English Spanish / Castilian |
| topic |
AVERAGE INFLATION BANK LENDING BANK LOANS BANK SUPERVISION BANKING CRISES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BASE YEAR BUDGET CONSTRAINTS BUDGET DEFICIT BUDGET DEFICITS CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANKS CENTRAL PLANNING CONSUMERS COUNTER-CYCLICAL POLICIES CURRENCY BOARD CURRENCY BOARDS CURRENT ACCOUNT DEBT DEVALUATION DEVELOPMENT ECONOMICS DISINFLATION ECONOMIC WELFARE ECONOMISTS EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATE FIXED EXCHANGE RATES FORECASTS FOREIGN CAPITAL FOREIGN EXCHANGE GDP GROWTH RATES HARD BUDGET CONSTRAINTS HIGH INFLATION HIGH RATES HUMAN CAPITAL INCOME INCOME LEVELS INDEXATION INEFFICIENCY INFLATION INFLATION RATE INFLATION RATES INFLATION STABILIZATION INTEREST RATES INTERNATIONAL TRADE LAWS LEGISLATION LENDER OF LAST RESORT MACROECONOMIC CONDITIONS MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MACROECONOMICS MARKET ECONOMIES MONETARY AUTHORITY MONETARY FINANCING MONETARY POLICY MONETARY TARGETING MONETARY UNION MONEY CREATION MONEY SUPPLY MORAL HAZARD OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL SUPPORT PRICE ADJUSTMENT PRICE CHANGES PRICE INCREASES PRICE SUBSIDIES PRIVATE BANKS PRIVATE SECTOR PRIVATIZATION PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEFICITS PUBLIC SECTOR PUBLIC SPENDING PURCHASING POWER REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INTEREST REAL INTEREST RATES REAL TERMS REAL WAGE REAL WAGES RECAPITALIZATION RELATIVE PRICE RETAINED EARNINGS SAVINGS SECURITIES SLOW GROWTH SOFT BUDGET CONSTRAINTS STABILIZATION PROGRAM STRUCTURAL REFORMS SUPPLY CURVE TAX COLLECTION TAX REFORM TAX REVENUES TRANSITION ECONOMIES TREASURY BILLS UNDERVALUATION UNEMPLOYMENT UNEMPLOYMENT RATES WAGES WELFARE SYSTEM |
| spellingShingle |
AVERAGE INFLATION BANK LENDING BANK LOANS BANK SUPERVISION BANKING CRISES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BASE YEAR BUDGET CONSTRAINTS BUDGET DEFICIT BUDGET DEFICITS CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANKS CENTRAL PLANNING CONSUMERS COUNTER-CYCLICAL POLICIES CURRENCY BOARD CURRENCY BOARDS CURRENT ACCOUNT DEBT DEVALUATION DEVELOPMENT ECONOMICS DISINFLATION ECONOMIC WELFARE ECONOMISTS EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATE FIXED EXCHANGE RATES FORECASTS FOREIGN CAPITAL FOREIGN EXCHANGE GDP GROWTH RATES HARD BUDGET CONSTRAINTS HIGH INFLATION HIGH RATES HUMAN CAPITAL INCOME INCOME LEVELS INDEXATION INEFFICIENCY INFLATION INFLATION RATE INFLATION RATES INFLATION STABILIZATION INTEREST RATES INTERNATIONAL TRADE LAWS LEGISLATION LENDER OF LAST RESORT MACROECONOMIC CONDITIONS MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MACROECONOMICS MARKET ECONOMIES MONETARY AUTHORITY MONETARY FINANCING MONETARY POLICY MONETARY TARGETING MONETARY UNION MONEY CREATION MONEY SUPPLY MORAL HAZARD OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL SUPPORT PRICE ADJUSTMENT PRICE CHANGES PRICE INCREASES PRICE SUBSIDIES PRIVATE BANKS PRIVATE SECTOR PRIVATIZATION PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEFICITS PUBLIC SECTOR PUBLIC SPENDING PURCHASING POWER REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INTEREST REAL INTEREST RATES REAL TERMS REAL WAGE REAL WAGES RECAPITALIZATION RELATIVE PRICE RETAINED EARNINGS SAVINGS SECURITIES SLOW GROWTH SOFT BUDGET CONSTRAINTS STABILIZATION PROGRAM STRUCTURAL REFORMS SUPPLY CURVE TAX COLLECTION TAX REFORM TAX REVENUES TRANSITION ECONOMIES TREASURY BILLS UNDERVALUATION UNEMPLOYMENT UNEMPLOYMENT RATES WAGES WELFARE SYSTEM Wyplosz, Charles Ten Years of Transformation : Macroeconomic Lessons |
| geographic_facet |
Europe and Central Asia Bulgaria Romania Russian Federation |
| relation |
Policy Research Working Paper;No. 2288 |
| description |
After surveying the facts and distilling
the voluminous literature on the transition to market
economies, the author arrives at several conclusions: with
hindsight, the old debate - Big Bang versus gradualism - was
really a problem of feasibility, although many of the
arguments in favor of the Big Bang have now been proven
right. Once more, inflation has been found to be
incompatible with growth and the importance of a good
microeconomic structure - especially an effective banking
system - has been confirmed. The decline of the state in
transition economies is both spectacular and puzzling -
combining features that are both desirable and dangerous.
Among useful lessons learned: 1) It has paid to start early
and move fast. The Big Bang is highly desirable but
impractical, and gradualism is unavoidable but ought to be
compressed as much as possible. The countries that bit the
bullet early and hard have done better over the past decade.
2) Stabilize first; growth next. Macroeconomic stabilization
is a prerequisite for growth. The budget deficit need not be
eliminated, but the link between deficits and money growth
must be severed. 3) Structural reform is important, and
microeconomic policies, often overlooked, should be started
as soon as possible. This means establishing property
rights, hardening budget constraints, building a healthy
banking system, and ensuring true domestic competition. 4)
The choice of an exchange rate regime, another early
controversy, is apparently less important than adherence to
a strict monetary policy. The floaters have tightly managed
their exchange rates, while the fixers have repeatedly
devalued and have often ended up floating. Some form of
monetary targeting is needed, but it matters little which
target is chosen so long as it is adhered to. 5) Creating
irreversibilities early on allows governments to change
without seriously affecting the transition. The less stable
the economy, the more politics matters. A shaky economic
basis is fertile ground for policy reversals that set the
clock back several years (Bulgaria, Romania, Russia). |
| format |
Working Paper |
| author |
Wyplosz, Charles |
| author_facet |
Wyplosz, Charles |
| author_sort |
Wyplosz, Charles |
| title |
Ten Years of Transformation : Macroeconomic Lessons |
| title_short |
Ten Years of Transformation : Macroeconomic Lessons |
| title_full |
Ten Years of Transformation : Macroeconomic Lessons |
| title_fullStr |
Ten Years of Transformation : Macroeconomic Lessons |
| title_full_unstemmed |
Ten Years of Transformation : Macroeconomic Lessons |
| title_sort |
ten years of transformation : macroeconomic lessons |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2000/02/438332/ten-years-transformation-macroeconomic-lessons http://hdl.handle.net/10986/22337 |
| _version_ |
1764450627984818176 |
| spelling |
okr-10986-223372021-04-23T14:04:07Z Ten Years of Transformation : Macroeconomic Lessons Wyplosz, Charles AVERAGE INFLATION BANK LENDING BANK LOANS BANK SUPERVISION BANKING CRISES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BASE YEAR BUDGET CONSTRAINTS BUDGET DEFICIT BUDGET DEFICITS CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANKS CENTRAL PLANNING CONSUMERS COUNTER-CYCLICAL POLICIES CURRENCY BOARD CURRENCY BOARDS CURRENT ACCOUNT DEBT DEVALUATION DEVELOPMENT ECONOMICS DISINFLATION ECONOMIC WELFARE ECONOMISTS EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATE FIXED EXCHANGE RATES FORECASTS FOREIGN CAPITAL FOREIGN EXCHANGE GDP GROWTH RATES HARD BUDGET CONSTRAINTS HIGH INFLATION HIGH RATES HUMAN CAPITAL INCOME INCOME LEVELS INDEXATION INEFFICIENCY INFLATION INFLATION RATE INFLATION RATES INFLATION STABILIZATION INTEREST RATES INTERNATIONAL TRADE LAWS LEGISLATION LENDER OF LAST RESORT MACROECONOMIC CONDITIONS MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MACROECONOMICS MARKET ECONOMIES MONETARY AUTHORITY MONETARY FINANCING MONETARY POLICY MONETARY TARGETING MONETARY UNION MONEY CREATION MONEY SUPPLY MORAL HAZARD OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL SUPPORT PRICE ADJUSTMENT PRICE CHANGES PRICE INCREASES PRICE SUBSIDIES PRIVATE BANKS PRIVATE SECTOR PRIVATIZATION PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEFICITS PUBLIC SECTOR PUBLIC SPENDING PURCHASING POWER REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INTEREST REAL INTEREST RATES REAL TERMS REAL WAGE REAL WAGES RECAPITALIZATION RELATIVE PRICE RETAINED EARNINGS SAVINGS SECURITIES SLOW GROWTH SOFT BUDGET CONSTRAINTS STABILIZATION PROGRAM STRUCTURAL REFORMS SUPPLY CURVE TAX COLLECTION TAX REFORM TAX REVENUES TRANSITION ECONOMIES TREASURY BILLS UNDERVALUATION UNEMPLOYMENT UNEMPLOYMENT RATES WAGES WELFARE SYSTEM After surveying the facts and distilling the voluminous literature on the transition to market economies, the author arrives at several conclusions: with hindsight, the old debate - Big Bang versus gradualism - was really a problem of feasibility, although many of the arguments in favor of the Big Bang have now been proven right. Once more, inflation has been found to be incompatible with growth and the importance of a good microeconomic structure - especially an effective banking system - has been confirmed. The decline of the state in transition economies is both spectacular and puzzling - combining features that are both desirable and dangerous. Among useful lessons learned: 1) It has paid to start early and move fast. The Big Bang is highly desirable but impractical, and gradualism is unavoidable but ought to be compressed as much as possible. The countries that bit the bullet early and hard have done better over the past decade. 2) Stabilize first; growth next. Macroeconomic stabilization is a prerequisite for growth. The budget deficit need not be eliminated, but the link between deficits and money growth must be severed. 3) Structural reform is important, and microeconomic policies, often overlooked, should be started as soon as possible. This means establishing property rights, hardening budget constraints, building a healthy banking system, and ensuring true domestic competition. 4) The choice of an exchange rate regime, another early controversy, is apparently less important than adherence to a strict monetary policy. The floaters have tightly managed their exchange rates, while the fixers have repeatedly devalued and have often ended up floating. Some form of monetary targeting is needed, but it matters little which target is chosen so long as it is adhered to. 5) Creating irreversibilities early on allows governments to change without seriously affecting the transition. The less stable the economy, the more politics matters. A shaky economic basis is fertile ground for policy reversals that set the clock back several years (Bulgaria, Romania, Russia). 2015-07-29T15:53:06Z 2015-07-29T15:53:06Z 2000-02 Working Paper http://documents.worldbank.org/curated/en/2000/02/438332/ten-years-transformation-macroeconomic-lessons http://hdl.handle.net/10986/22337 English es Policy Research Working Paper;No. 2288 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Bulgaria Romania Russian Federation |