Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39781
Authors: 
Hetze, Pascal
Year of Publication: 
2006
Series/Report no.: 
Thünen-series of applied economic theory 66
Abstract: 
The macroeconomic experience has been somewhat ambiguous during the historic experiment of economic transition in the former centrally-planed countries in Central and East Europe (CEE). The economic restructuring produced a notable catching-up in terms of productivity but also a J-curve shape of output growth accompanied by an increase in unemployment on a large scale. This paper models the transformation progress which leads to these contradictory outcomes. Before transition initiated catching-up, the economies suffered from two limits to growth: a gap of usable capital and a gap of technologies. Accordingly, a rapid technology transfer from the advanced Western economies led to a significant technological and structural change combined with high rates of labor reallocation. If we include frictions in the consequent matching between job seekers and jobs, the model reproduces the pattern of productivity, growth and unemployment that we find in the CEE countries.
Subjects: 
catching-up
growth
unemployment
technological change
transition economies
JEL: 
E24
O33
P20
Document Type: 
Working Paper

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