ABSTRACT The authors assess the presence and extent of involuntary savings by comparing the predi... more ABSTRACT The authors assess the presence and extent of involuntary savings by comparing the predicted savings rates of market economies with those of the pre-transition economies. On balance, predicted savings rates fell short of actual savings rates, especially for the former Soviet Union and the Baltics -- providing some support for the notion of excessive pre-transition savings. Comparing the savings behavior of market economies and transition economies, they found substantial similarities, except for a negative link between savings and GDP growth. As the fastest-growing transition economies are at the bottom of the adjustment J-curve, the finding is consistent with consumption smoothing. Finally, they explored whether differences in the extent of economic liberalization affected savings rates in the cross-section of transition economies. They found that liberalization is associated with lower savings, with a one-year lag. To the extent that liberalization is perceived as an indicator of likely future growth, this behavior is consistent with smoothing in the face of a J-curve change in output.
January 1996Among the findings from this analysis of patterns of transition: Liberalization is es... more January 1996Among the findings from this analysis of patterns of transition: Liberalization is essential to stabilization despite an initial spurt in prices. And economic recovery depends on the duration as well as the intensity of liberalizing internal and external markets and facilitating private sector entry.In analyzing the transitional experience of countries in Central and Eastern Europe(CEE) and the former Soviet
The financial systems of developing countries tend to be "restricted" or "represse... more The financial systems of developing countries tend to be "restricted" or "repressed" by burdensome reserve requirements, interest-rate ceilings, foreign-exchange regulations, constraints on banks? balance sheets, and the heavy financial-sector taxation. This article explores preliminary evidence from the post-communist economies of Eastern Europe and the former Soviet Union. Using data from 25 countries between 1991 and 1996, we find that the standard public-finance framework has limited applicability to the transition economies. It is more fruitful to examine how political institutions affect financial policy. Our findings suggest that post-communist governments may adopt repressive financial controls to ensure the survival of those in power. In countries where the pre-reform elite are abundant in legislative bodies and where interparty competition is low, such elite have perpetuated a system of implicit subsidies. The main beneficiaries of these policies are la...
ABSTRACT The authors assess the presence and extent of involuntary savings by comparing the predi... more ABSTRACT The authors assess the presence and extent of involuntary savings by comparing the predicted savings rates of market economies with those of the pre-transition economies. On balance, predicted savings rates fell short of actual savings rates, especially for the former Soviet Union and the Baltics -- providing some support for the notion of excessive pre-transition savings. Comparing the savings behavior of market economies and transition economies, they found substantial similarities, except for a negative link between savings and GDP growth. As the fastest-growing transition economies are at the bottom of the adjustment J-curve, the finding is consistent with consumption smoothing. Finally, they explored whether differences in the extent of economic liberalization affected savings rates in the cross-section of transition economies. They found that liberalization is associated with lower savings, with a one-year lag. To the extent that liberalization is perceived as an indicator of likely future growth, this behavior is consistent with smoothing in the face of a J-curve change in output.
January 1996Among the findings from this analysis of patterns of transition: Liberalization is es... more January 1996Among the findings from this analysis of patterns of transition: Liberalization is essential to stabilization despite an initial spurt in prices. And economic recovery depends on the duration as well as the intensity of liberalizing internal and external markets and facilitating private sector entry.In analyzing the transitional experience of countries in Central and Eastern Europe(CEE) and the former Soviet
The financial systems of developing countries tend to be "restricted" or "represse... more The financial systems of developing countries tend to be "restricted" or "repressed" by burdensome reserve requirements, interest-rate ceilings, foreign-exchange regulations, constraints on banks? balance sheets, and the heavy financial-sector taxation. This article explores preliminary evidence from the post-communist economies of Eastern Europe and the former Soviet Union. Using data from 25 countries between 1991 and 1996, we find that the standard public-finance framework has limited applicability to the transition economies. It is more fruitful to examine how political institutions affect financial policy. Our findings suggest that post-communist governments may adopt repressive financial controls to ensure the survival of those in power. In countries where the pre-reform elite are abundant in legislative bodies and where interparty competition is low, such elite have perpetuated a system of implicit subsidies. The main beneficiaries of these policies are la...
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