search query: @indexterm Public finance / total: 473
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Author: | Castanheira, M. |
Title: | Public finance and the optimal speed of transition |
Journal: | Economics of transition
2003 : VOL. 11:3, p. 435-462 |
Index terms: | Equilibrium analysis Public finance Subsidies Transition economies |
Language: | eng |
Abstract: | A general equilibrium model that jointly considers the influence of capital accumulation constraints and of labour market frictions on the process of transition is developed in this paper. The economic and budgetary costs of different government policies are endogenized and it is shown that, early in transition, governments ought to subsidize state companies. Provided that intertemporal commitment is feasible, this policy limits the initial output fall, which relaxes capital accumulation constraints, accelerates transition, and increases welfare. |
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