American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Transition Economies: Performance and Challenges JanSvejnarUniversity of Michigan, Ann Arbor, Michigan, US and Executive and Supervisory Committee, CERGE-EI, Prague, Czech Republic 3 28 I present data and assess the first twelve years of the transition from plan to market. Transformations have taken place, but the income gap between the transition and advanced economies has widened. Transition countries further east have performed worse than those further west, but policies matter. All countries carried out quickly Type I reforms, such as macroeconomic stabilization, price liberalization, small-scale privatization, and breakup of state-owned enterprises. They differed in Type II reforms, such as large-scale privatization and development of banking and legal systems. Countries that developed a functioning legal framework and corporate governance have performed better than others. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=1&issue_date=Winter 2002 10.1257/0895330027058 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article The Political Economy of Transition GérardRolandUniversity of California, Berkely, California, Transition Economics Program of the Center for Economic Policy Research, London, United Kingdom, and William 29 50 The overriding importance of political constraints in the transition process has led to developments of the theory of the political economy of reform. What are the main insights from that theory? How does it reflect the transition reality? What have we learned, and what do we still need to learn? The present article will attempt to answer those questions. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=2&issue_date=Winter 2002 10.1257/0895330027102 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Institutional Determinants of Labor Reallocation in Transition TitoBoeriIGIER-Bocconi, Milan, Italy, Center for Economic Policy Research, London, United Kingdom, William Davidson Institute, Ann Arbor, Michigan and Fondazione Rodolfo, Debenedetti, KatherineTerrellBusiness School and the Ford School of Public Policy at the University of Michigan, and William Davidson Institute, Ann Arbor, Michigan, and Centre for Economic 51 76 The transition process differed in the countries of the Former Soviet Union (FSU) and those of Central and Eastern Europe (CEE) in terms of reallocation of labor real wage, employment and output adjustment. We sift through the theoretical and empirical literature to find an explanation for these diverging adjustment trajectories and conclude that they can be explained by the fact that the CEE countries adopted social policies that upheld wages at the bottom of the distribution forcing the old sector to restructure or collapse while the FSU countries allowed wages to free-fall not forcing the hand of the old sector. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=3&issue_date=Winter 2002 10.1257/0895330027111 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article The Great Divide and Beyond: Financial Architecture in Transition ErikBerglofStockholm Institute of Transition Economics (SITE), Stockholm School of Economics, Stockholm, Sweden and Centre for Economic Policy Research, London, United Kingdom PatrickBoltonPrinceton University, Princeton, New Jersey and National Bureau of Economic Research, Cambridge, Massachusetts, US and Centre for Economic Policy Research, London, 77 100 The Great Divide in economic and financial development and the convergence in financial architecture among the successful countries raise fundamental questions about how financial development interacts with economic growth. Is it possible to engineer a development takeoff by creating a modern financial architecture from scratch? Or are financial institutions and markets a reflection of underlying conditions in the real sector? Or are both financial development and economic growth driven by some other underlying variables? Is it possible to leapfrog certain stages of financial development or must all countries go through a phase of bank-oriented financial architecture? The experience of the transition economies represents a unique opportunity to shed new light on these issues. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=4&issue_date=Winter 2002 10.1257/0895330027120 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Competition and Corporate Governance in Transition SaulEstrinLondon Business School, United Kingdom 101 124 This paper examines the elements of institutional development critical to the enhancement of company performance in transition economies. This includes initial conditions, forms of privatization, institutional frameworks and the competitiveness of markets. Comparing empirical evidence, the paper concludes that there is a clear distinction in effectiveness of policies followed and their impact between Central Europe and CIS countries. This divergence is attributed to fundamentally different political attitudes toward reform, the need of CIS governments to gain political support for reform and as a consequence of the desire of Central European countries to join European Union. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=5&issue_date=Winter 2002 10.1257/0895330027139 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Environmental Policy Since Earth Day I: What Have We Gained? A. MyrickFreemanIIIBowdoin College, Brunswick, Maine, US 125 146 I review the data on costs and benefits of the major environmental laws passed during the 1970s. The winners in terms of benefit-cost analysis include: getting lead out of gasoline; controlling particulate air pollution; reducing the concentration of lead in drinking water; and the cleanup of hazardous waste sites with the lowest cost per cancer case avoided under Superfund The losers include: mobile source air pollution control; water pollution control; and many of the regulations and cleanup decisions taken under the Federal Insecticide, Fungicide, and Rodenticide Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and Superfund. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=6&issue_date=Winter 2002 10.1257/0895330027148 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Confronting the Environmental Kuznets Curve SusmitaDasguptaDevelopment Research Group, World Bank, Washington, D.C., US BenoitLaplanteDevelopment Research Group, World Bank, Washington, D.C., US HuaWangDevelopment Research Group, World Bank, Washington, D.C., US DavidWheelerDevelopment Research Group, World Bank, Washington, D.C., US 147 168 The environmental Kuznets curve posits an inverted-U relationship between pollution and economic development. Pessimistic critics of empirically estimated curves have argued that their declining portions are illusory, either because they are cross-sectional snapshots that mask a long-run "race to the bottom" in environmental standards, or because industrial societies will continually produce new pollutants as the old ones are controlled. However, recent evidence has fostered an optimistic view by suggesting that the curve is actually flattening and shifting to the left. The driving forces appear to be economic liberalization, clean technology diffusion, and new approaches to pollution regulation in developing countries. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=7&issue_date=Winter 2002 10.1257/0895330027157 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article What Really Matters in Auction Design PaulKlempererOxford University, England 169 189 The most important issues in auction design are the traditional concerns of competition policy-preventing collusive, predatory, and entry-deterring behavior. Ascending and uniform-price auctions are particularly vulnerable to these problems. The Anglo-Dutch auction - a hybrid of the sealed-bid and ascending auctions - may perform better. Effective antitrust is also critical. Notable fiascoes in auctioning mobile-phone licenses, television franchises, companies, eletricty, etc., and especially the European "third-generation" (UMTS) spectrum auctions, show that everything depends on the details of the context. Auction design is not "one size fits all." http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=8&issue_date=Winter 2002 10.1257/0895330027166 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article The Trouble With Electricity Markets: Understanding California's Restructuring Disaster SeverinBorensteinUniversity of California Energy Institute and Haas School of Business, University of California, Berkeley, California, US 191 211 In June 2000, after two years of fairly smooth operation, California's deregulated wholesale electricity market began producing extremely high prices and threats of supply shortages. The upheaval demonstrated dramatically why most current electricity markets are extremely volatile: demand is difficult to forecast and exhibits virtually no price responsiveness, while supply faces strict production constraints and prohibitive storage costs. This structure leads to periods of surplus and of shortage, the latter exacerbated by sellers' ability to exercise market power. Electricity markets can function much more smoothly, however, if they are designed to support price-responsive demand and long-term wholesale contracts for electricity. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=9&issue_date=Winter 2002 10.1257/0895330027175 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Policy Watch: U.S. Disability Policy in a Changing Environment Richard V.BurkhauserCornell University, Ithaca, New York, US Mary C.DalyFederal Reserve Bank of San Fransisco, San Fransisco, California, US 213 224 In this paper we provide a context for evaluating the goals and effectiveness of current disability policy. We review the Social Security Disability Insurance and Supplemental Security Income programs and examine trends in disability benefit receipt and employment among working-age people with disabilities. We discuss the difficulties in crafting efficient and equitable programs for this difficult to target, heterogeneous population. We conclude that changes in policy rather than in underlying health are most likely behind the increases in disability benefit receipt and the declines in employment of working-age people with disabilities over the 1990s business cycle. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=10&issue_date=Winter 2002 10.1257/0895330027067 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Data Watch: Research Data from Transition Economies Randall K.FilerHunter College and the Graduate Center, City University of New York, New York City, New York and CERGE-EI, Prague, Czech Republic and William Davidson JanHanousekCERGE-EI, Prague, Czech Republic and William Davidson Institute, Ann Arbor, Michigan, US 225 240 Ten years into the transition from communism in the countries of the former Soviet Union and central and eastern Europe, a cursory search of the EconLit database turns up hundreds of empirical studies published in refereed journals that deal with various issues in transition economies. Even so, we suspect that many economists are prevented from making full use of the possibilities offered by the transition by the difficulties of obtaining and interpreting data from the region. The purpose of this brief essay is to indicate some possible sources for data that can be used for economic analysis, as well as some cautions regarding the use of these data. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=11&issue_date=Winter 2002 10.1257/0895330027076 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Recommendations for Further Reading BernardSaffranSwarthmore College, Swarthmore, Pennsylvania, US 241 248 http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=12&issue_date=Winter 2002 10.1257/0895330027085 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 1 Winter 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=1&issue_date=Winter 2002 Journal Article Notes 249 252 http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=1&article=13&issue_date=Winter 2002 10.1257/0895330027094