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...

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 discusses three aspects of stabilization and international integration: the real wage; inflation; and the real effective exchange rate. Using empirical evidence on inflation and the real effective exchange rate, we evaluate the gradualist option represented by the Hungarian reforms....

The paper compares the experience with shock therapies in East Germany, Poland and the CSFR. After an analysis of the individual starting conditions and economic performance since the inception of comprehensive reform programmes it focuses on the specific elements of the East German reform...

This paper examines the changing incentives for the efficient management of firms in Eastern Europe. It contrasts the internal constitution of the firm (its governance and reward structures) with the various constraints imposed on the firm's activities by external conditions in capital, labour...

In this paper we focus on the macroeconomic framework for the transformation of the formerly socialist economies of Central Europe into capitalist mixed market economies. We construct a simple model to compare the situations in Hungary and Poland on the eve of the transformation before the new...

A microeconomic theoretical model shows that two factors - the compensation and progressivity effects - produce the shifting (if any) of tax rates on wage formation. From an analytical viewpoint, they may be positive or negative and of equal or different sign. A microfounded nested macroeconomic...

This paper surveys the emerging labour markets of the transforming economies of Central and Eastern Europe. Pissarides's model of equilibrium unemployment highlights the dynamics of labour markets as an important factor in the transformation, and labour market institutions will determine the...

Difficulties in European fiscal harmonization will mainly depend on present inter-country differences in effective rather than scheduled tax rates and tax structures. This paper therefore tries to evaluate the historical and current heterogeneities and similarities which characterize not only de...

The paper examines the optimal level of training investment when trained workers are mobile, wage contracts are time-consistent, and training comprises both specific and general skills. It is shown that, in the absence of a social planner, the firm has ex-post monopsonistic power that drives...