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  4. Spring 1996
  5. Stabilization and Growth in Transition Economies: The Early Experience

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Stabilization and Growth in Transition Economies: The Early Experience

  • Stanley Fischer
  • Ratna Sahay
  • Carlos A. Vegh
Journal of Economic Perspectives
vol. 10, no. 2, Spring 1996
(pp. 45–66)
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Abstract

The authors analyze the growth and stabilization experience in twenty-six transition economies in Eastern Europe, the former Soviet Union, and Mongolia for the period 1989-94. Inflation rates have declined significantly in most countries following an inflation stabilization program. Typically, stabilization has been followed by growth within two years; and growth does not occur without stabilization. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation.

Citation

Fischer, Stanley, Ratna Sahay, and Carlos A. Vegh. 1996. "Stabilization and Growth in Transition Economies: The Early Experience." Journal of Economic Perspectives, 10 (2): 45–66. DOI: 10.1257/jep.10.2.45

JEL Classification

  • P20 Socialist Systems and Transitional Economies: General
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