Growth in Transition: What We Know, What We Don't, and What We Should

This essay surveys macroeconomic issues that marked the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. We first establish a set of stylized facts of the transition so far, namely: (1) output fell, (2) capital shrank, (3) labor moved, (4) trade reoriented, (5) the structure changed, (6) institutions collapsed, and (7) transition costs. We then critically survey the theoretical literature on transition, discussing various explanations for the initial output fall as well as medium term issues, such as optimal speed of transition, disorganization, institutions and sectoral reallocation as a source of output dynamics. Last, we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts. The essay concludes with a succinct list of suggestions for future research.http://deepblue.lib.umich.edu/bitstream/2027.42/39854/3/wp470.pd

Growth in Transition: What We Know, What We Don't, and What We Should

This essay surveys macroeconomic issues that marked the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. We first establish a set of stylized facts of the transition so far, namely: (1) output fell, (2) capital shrank, (3) labor moved, (4) trade reoriented, (5) the structure changed, (6) institutions collapsed, and (7) transition costs. We then critically survey the theoretical literature on transition, discussing various explanations for the initial output fall as well as medium term issues, such as optimal speed of transition, disorganization, institutions and sectoral reallocation as a source of output dynamics. Last, we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts. The essay concludes with a succinct list of suggestions for future research.Economic Growth, Transition Economies

Financial Liberalization and Democracy: The Role of Reform Reversals

The relationship between economic and political liberalization has received a great deal of attention lately, yet the possibility of a nonlinear relationship and the role of reversals remain largely neglected. Focusing on democratization and financial reform, this paper offers evidence for a U-shaped relationship across countries, over time as well as in a panel setting using a wide range of estimators for various reform measures. We link this non-linear relationship to the notion of partial or captured democracy. We provide as well econometric support showing that even when de facto is modelled as a function of de jure financial liberalization, this non-linearity obtains.reform reversals, political liberalization, economic liberalization, financial reform

Leverage and productivity growth in emerging economies: Is there a threshold effect?

While credit is essential for investment, innovation and economic growth, there are risks to unfettered credit booms. The present paper provides an innovative micro-economic approach to identify the threshold leverage beyond which corporate indebtedness becomes “excessive”. In particular, the paper hypothesizes a non-linear relationship in that moderate leverage could boost growth while very high leverage could restrict total factor productivity growth, through increased likelihood of financial distress and bankruptcy. Estimates of a threshold model for a group of emerging CEE countries confirm the non-linear relationship, after controlling for various firm, industry and financial market characteristics.Financial support from ESRC grant RES-062-23-0986 is gratefully acknowledge

Greece is a far more willing ‘reformer’ than it is given credit for

Although debt restructuring and austerity have defined the debate on Greece and the Eurozone crisis, the role of structural reforms has been less well-understood. Nauro Campos and Fabrizio Coricelli write that this is partly because analysing structural reforms is only possible through a re-examination of the relationship between the EU and Greece, which requires robust ‘counterfactuals’. Presenting evidence from a detailed study of the effect of EU accession on current member states, they write that Greece is the only country that has experienced negative growth as a result of its EU membership, but that this negative effect also shrank after 1995. They argue that structural reforms may offer one explanation for this successful shift

Liquidity squeeze on SMEs during the great recession in Europe: The role of trade credit

We find that European SMEs significantly increased their net trade credit to sales ratio during the Great Recession. For the aggregate of SMEs, trade credit did not provide any buffer to the contraction in bank loans. In fact, through increased net trade credit, SMEs suffered a squeeze in their liquidity and this phenomenon reflects the weak bargaining power of SMEs in their trade credit relationship with larger firms. Therefore, increased net trade credit by SMEs does not reflect an efficient reallocation of credit, and it calls for policy actions. These policy actions are highly relevant, given that the liquidity squeeze had significant adverse effects on the real performance of SMEs, contributing to the recession and to the subsequent timid recovery of European economies. We explore various policies that could be implemented to relieve SMEs from the liquidity squeeze induced by the increase in their receivables

EU Membership, Mrs Thatcher's Reforms and Britain's Economic Decline

This paper presents a dissonant view on post-war British economic performance. A defining feature is the decline of the UK relative to the six founding members of the European Union after 1945. However, this relative decline stopped. The conventional view is that a turning point occurs in the mid-1980s when Mrs Thatcher implements far-reaching structural reforms. This paper asks whether econometric evidence supports this conventional view and finds it does not. We then examine an alternative hypothesis: this turning point occurs around 1970 when the UK joined the European Community. We find strong econometric support for this view. The intuition we offer is that EU membership signalled the prominence of business groups that chose to compete at the high-tech end of the common European market against those business groups that preferred comparative advantage-driven Commonwealth markets (mostly former colonies). Those pro-Europe business groups later become the constituency that provides support for Mrs Thatcher's reforms. Without this vital support, we argue Mrs Thatcher's structural reforms would not have been nearly as effective, if proposed and implemented at all

Institutional Integration and Economic Growth in Europe

The literature on the growth effects of European integration remains inconclusive. This is due to 9 severe methodological difficulties mostly driven by country heterogeneity. This paper addresses 10 these concerns using the synthetic control method. It constructs counterfactuals for countries that 11 joined the European Union (EU) from 1973 to 2004. We find that growth effects from EU 12 membership are large and positive, with Greece as the exception. Despite substantial variation 13 across countries and over time, we estimate that without European integration, per capita 14 incomes would have been, on average, approximately 10 percent lower in the first ten years after 15 joining the EU

Improved planning abilities in binge eating.

OBJECTIVE: The role of planning in binge eating episodes is unknown. We investigated the characteristics of planning associated with food cues in binging patients. We studied planning based on backward reasoning, reasoning that determines a sequence of actions back to front from the final outcome. METHOD: A cross-sectional study was conducted with 20 healthy participants, 20 bulimia nervosa (BN), 22 restrictive (ANR) and 23 binging anorexia nervosa (ANB), without any concomitant impulsive disorder. In neutral/relaxing, binge food and stressful conditions, backward reasoning was assessed with the Race game, promotion of delayed large rewards with an intertemporal discounting task, attention with the Simon task, and repeating a dominant behavior with the Go/No-go task. RESULTS: BN and to a lower extent ANB patients succeeded more at the Race game in food than in neutral condition. This difference discriminated binging from non-binging participants. Backward reasoning in the food condition was associated with lower approach behavior toward food in BN patients, and higher food avoidance in ANB patients. Enhanced backward reasoning in the food condition related to preferences for delayed large rewards in BN patients. In BN and ANB patients the enhanced success rate at the Race game in the food condition was associated with higher attention paid to binge food. CONCLUSION: These findings introduce a novel process underlying binges: planning based on backward reasoning is associated with binges. It likely aims to reduce craving for binge foods and extend binge refractory period in BN patients, and avoid binging in ANB patients. Shifts between these goals might explain shifts between eating disorder subtypes

Dissociation between Private and Social Counterfactual Value Signals Following Ventromedial Prefrontal Cortex Damage

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