The fourteenth issue of Economic Policy, jointly sponsored by CEPR, the Maison des Sciences de l'Homme and the Ecole des Hautes en Sciences Sociales, was launched at a lunchtime meeting on 26 May addressed by L Alan Winters. In this Special Issue, devoted to Eastern Europe:

Barry Eichengreen and Marc Uzan find that the Marshall Plan aided post-war Western Europe's recovery, but not by stimulating investment, augmenting imports and financing infrastructure repair. Its greatest contribution lay in its conditionality: by facilitating the restoration of financial stability and the liberalization of production and prices, it ended the shortage of consumer goods and hoarding of labour and commodities. These results have major implications for Western assistance to Eastern Europe now.

Carl B Hamilton and L Alan Winters find that liberalization and reform will reduce trade among former CMEA members and substantially increase their trade with the West. The East will have a clear comparative advantage in agriculture, and its high- quality human capital suggests that its comparative advantage in manufactures will lie in goods of at least medium technology. They stress the need for the West to admit imports from the East in order to extend its own export markets.

Andrew Berg and Jeffrey Sachs assess the effects of Poland's `big bang' approach to economic reform, in which convertibility is attained mainly through a nominal depreciation to bring prices into line with aggregate demand and the money supply. They find a much milder recession than many recent studies and maintain that the rapid move to free trade did not significantly contribute to the loss of output.

Guillermo Calvo and Fabrizio Coricelli, in contrast, attribute the substantial and sudden collapse in industrial output and inflation persistence in Poland to the excessive initial stock of inventories, an exogenous fall in household demand and above all to tight credit, which helped to magnify the fall in output and coordinate it across sectors.

Paul Hare and Tamás Révész argue for the more gradualist approach to transition adopted in Hungary, which began its economic reforms in the 1960s and slowly introduced market economy institutions in the 1980s. They assert that Hungary's indebtedness may not seriously threaten its transition, citing both its relative success in attracting foreign investment and its recent export success. Most output is still produced in state-owned enterprises, so rapid and massive privatization may not be essential to the reform's success.

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