Publication
Using synthetic control method to estimate the growth effects of economic liberalisation: Evidence from transition economies
In this article, the authors examine the contribution of distinctive policy approaches to the economic transformation of former centrally planned economies into their respective paths of economic growth from the onset of the transition down to the present.
- Author
- Jaroslaw Kantorowicz and Rok Spruk
- Date
- 26 December 2023
- Links
- Read the full article here
This research examines the contribution of institutional reforms to economic growth. The authors distinguish between several classes of institutional reform in the approach to economic liberalisation. Based on a sample of 24 current and former transition economies for the period 1980–2016, the authors estimate the counterfactual scenarios related to each distinctive institutional approach to the economic liberalisation by making use of the synthetic control method.
The evidence in the article uncovers notable contrasts in the long-term effectiveness of designated policy approaches in recovering from the transitional recession. A variety of synthetic control estimates suggests that a sustained big bang approach (rapid reforms) appears to be the most effective approach, while an abortive and gradualist approach tends to produce a permanent breakdown of the growth trajectories relative to the estimated counterfactuals.