How I Learned to Stop Worrying and Love the Crisis

Posted: 13 Oct 2015

See all articles by Jan Fidrmuc

Jan Fidrmuc

Brunel University - Department of Economics and Finance; L.E.M., Université de Lille; CESifo (Center for Economic Studies and Ifo Institute); Global Labor Organization (GLO); Institute for Strategy and Analysis, Government Office of the Slovak Republic

Ariane Tichit

Université d'Auvergne - Clermont 1 - Centre d'Etudes et de Recherches sur le Developpement International (CERDI)

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Abstract

We investigate the effects of economic crises on the subsequent economic, performance, economic reform, democratization and institutional change. Our analysis is based on a sample of post-communist countries, most of which experienced severe economic, crises during the 1990s. We find that the severity of crisis has a positive impact on the subsequent pace of economic reform, economic growth and, with a delay, on investment and institutional change. Episodes of high inflation, moreover, translate into lower subsequent inflation. Crises thus serve as catalysts of reform and institutional change and lead to better long-term economic performance.

Keywords: Crisis, Transition, Growth, Inflation, Reform, Institutions

JEL Classification: O11, O47, P27

Suggested Citation

Fidrmuc, Jan and Fidrmuc, Jan and Tichit, Ariane, How I Learned to Stop Worrying and Love the Crisis. Economic Systems, Vol. 37, No. 4, 2013, Available at SSRN: https://ssrn.com/abstract=2673562

Jan Fidrmuc (Contact Author)

Brunel University - Department of Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom
+44 1895 266 528 (Phone)
+44 1895 269 770 (Fax)

L.E.M., Université de Lille ( email )

France

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Global Labor Organization (GLO) ( email )

Collogne
Germany

Institute for Strategy and Analysis, Government Office of the Slovak Republic ( email )

Bratislava
Slovakia

Ariane Tichit

Université d'Auvergne - Clermont 1 - Centre d'Etudes et de Recherches sur le Developpement International (CERDI) ( email )

65 Boulevard Francois Mitterrand
63000 Clermont-Ferrand Cedex 1
France

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