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| Author: | Merlevede, B. |
| Title: | Reform reversals and output growth in transition economies |
| Journal: | Economics of transition
2003 : VOL. 11:4, p. 649-669 |
| Index terms: | Growth Reforms Transition economies |
| Language: | eng |
| Abstract: | This study tests whether reform reversals during transition carry an economic cost. Reform is measured by an average reform index, while reform reversals are characterized by a drop in the average reform index. In the standard empirical framework the current level of reform affects growth negatively, while the lagged level affects growth positively. This non-linear effect implies a counterintuitive, short-lived positive effect of a reversal. In a simultaneous equation system with growth and the level of reform as dependent variables a reversal parameter is explicitly introduced. Empirical findings suggest that reversals have an immediate negative impact on real output growth. |
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