Institutions and initial conditions in transition: reconciling neo-institutional and neo-classical conceptions

Vonnegut, Andrew (2009): Institutions and initial conditions in transition: reconciling neo-institutional and neo-classical conceptions.

Abstract

Much empirical research has highlighted the importance of institutions and initial conditions in the transition to a market economy. However, relatively little is still know about how these factors directly affect growth paths. This paper explores how institutional factors and initial conditions explicitly impact consumer and firm decisions. Simulations are run on a simple growth model modified to reflect institutional conditions during transition. The model generates a series of growth paths that lend insight into how different institutional structures affect growth dynamics. Policies that work under certain institutional circumstances, such as the “big bang,” may not work under others.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic Transition; Economic Growth; Institutions; Simulation
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E27 - Forecasting and Simulation: Models and Applications; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P27 - Performance and Prospects

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