How I Learned to Stop Worrying and Love the Crisis
Posted: 13 Oct 2015
There are 2 versions of this paper
How I Learned to Stop Worrying and Love the Crisis
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
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