The Macroeconomics of Transition

How successful has the transition to market economies proved in East-Central Europe? The decision by the East European countries to move to market economies was accompanied by much hypothesising and expounding of economic theories. However, now that the initial euphoria has passed, it is time for a rational assessment of this transition and the success of those theories in practice. Since the more economically advance countries are situated in East Central Europe, Jan Winiecki and Andrzej Kondratowicz have focused their study on Czechoslovakia, Hungary, Poland and (former) Yugoslavia. The authors present a systematic account of macroeconomic developments and institutional changes in each of the countries up to the summer of 1991 and the collapse of, what was, Yugoslavia. They assess progress, dealing with the determinants of output, macro policies, wage, price and employment issues and the external balance. The authors give particular importance to institutional changes, since these have been particularly significant in the shaping of the macroeconomy. Each country report is preceded by a summary of common features of the transition and is followed by an analysis of theoretically based expectations of various aspects of the transition. The Macroeconomics of Transition is particularly important in that it assesses the accuracy and usefulness of various economic theories in explaining and predicting the unprecedented transition of the region and, in so doing, offers lessons for other less advanced East European countries.