The Output Decline in the Aftermath of Reform: The Cases of Bulgaria, Czechoslovakia, and Romania
Author:
Mr. Jonathan David Ostry
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Mr. Eduardo Borensztein
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Mr. Dimitri G Demekas
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This paper analyzes the declines in economic activity experienced by Bulgaria, the Czech and Slovak Federal Republic (CSFR), and Romania in the period since the initiation of market-oriented reforms in these countries. The paper reviews developments in the three countries and empirically investigates two questions that are key to the interpretation of the output decline: First, to what extent does the output fall reflect “structural change” (or a reallocation of resources across sectors) rather than a conventional recession? Second, to what extent have demand-side or supply-side forces been dominant in generating the output decline?
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