DP1616 Convergence in Output in Transition Economies: Central and Eastern Europe, 1970-1995

Author(s): Saul Estrin, Giovanni Urga
Publication Date: April 1997
Keyword(s): Growth Models, Kalman Filter, Time Series Test, Transition Economies, Unit Roots
JEL(s): C15, C22, C23, O40
Programme Areas: Transition Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1616

In this paper we use unit roots/cointegration analysis and time-varying parameters procedures to test for a common growth path in the ex-communist block, both pre- and post-reform. We test whether there has been convergence within the block and between the block as a group and the West. Surprisingly, there is little evidence of convergence within the communist block, which brings into question the effectiveness of policies to reduce differentials in income per capita across the region under the communists. There is also little evidence of convergence with respect to the West, for the 1970?90 period and when the early years of reform are included (1970?95).