The inefficiency of Soviet-type economies results from their monopolized production structure, which makes soft budget constraints almost inevitable, as enterprises have bargaining power and must face expropriative tax rates for macroeconomic stability. Systemic reform aims to improve...

East European countries have experienced sharp declines in real GDP since 1990. One of the reasons for this decline is the Soviet trade shock caused by the collapse of the CMEA and of traditional export markets in the Soviet Union. This paper is an attempt to quantify the magnitude of this...

By the end of 1991, Czechoslovakia, Hungary and Poland had achieved a substantial degree of openness to foreign trade. In all three countries, trade is now demonopolized and licensing and quotas play a very small role. Exchange controls have virtually disappeared for current-account...

The feasibility of systemic reforms may depend on their distributional consequences. The shift to a market economy can be expected to increase wage differentials and unemployment, which will have an adverse effect on income distribution. Income tax reform and the change in the system of consumer...

A key feature of Soviet-type economies is the excessive concentration of production and the skewed size distribution of enterprises. This is the root cause of the `soft budget constraint' and a natural outcome of the political economy of these countries. Given entrenched political support for a...

This paper studies the relationship between political conflict and economic growth in a simple model of endogenous growth with distributive conflicts. We study both the case of two `classes' (workers and capitalists) and the case of a continuum distribution of agents, characterized by their...

The nation-state system, democratic politics, and full economic integration are mutually incompatible. Of the three, at most two can be had together. The Bretton Woods/GATT regime was successful because its architects subjugated international economic integration to the needs and demands of...

The design of institutions is shaped by a fundamental trade-off. On the one hand, relationships and heterogeneity push governance down. On the other, the scale and scope benefits of market integration push governance up. A corner solution is rarely optimal. An intermediate outcome, a world...