The Path of Reform in Central and Eastern Europe: An Introduction

This paper is the Introduction to a special issue of European Economy on `The Path of Reform in Central and Eastern Europe'. It discusses the sources of the current wave of `Europessimism': exogenous shocks, adjustment costs, sequencing errors, and other policy errors. This analysis may help in assessing the extent to which we are observing a `J-Curve' phenomenon. The paper then considers some key topics in the strategy of reformers: (i) establishing a regime change; (ii) the order, speed and robustness of the chosen sequence of reforms; (iii) the institutional framework and the behaviour of firms; (iv) financial restructuring; (v) nominal and real anchors; (vi) convertibility and exchange rate policy; (vii) trade and debt.