This paper tests whether there is a macroeconomic cost of a reform reversal during transition. A reform reversal is … a counterintuitive, short-lived positive effect of a reversal. From a theoretical point of view however, most models … assume a reversal to be costly. The existence of reversal costs is even crucial for gradualist strategies to dominate big …

appropriate reform path.Using the coefficients from the empirical model, we find that even relatively small ex ante reversal …

that higher expected probabilities of reversal make policymakers more likely to opt for gradualism. Even relatively small …

model we find that even relatively small ex ante reversal probabilities suffice to tilt the balance in favour of gradualism …

ante reversal probabilities suffice to tilt the balance in favour of gradualism. The case for gradualism gains strength if …