Transition Strategies : Choices and Outcomes

The paper evaluates the effect of the speed and extent of reforms in twenty-five transition economies on growth and inflation, taking account of the endogeneity of reform choices vis a vis factors that may also influence outcomes. The results suggest that more comprehensive reforms result in a J-curve adjustment of output growth, with a same period decline and a larger lagged positive effect. Same period inflation increases as a result of greater liberalization, but decreases in subsequent periods. Controlling for the extent of liberalization, the speed with which it was attained has no additional effect on growth, i.e., there is no difference in growth rates between "radical" reform programs and (sucessfully completed) "gradualist" programs