Output Gains from Economic Liberalization: A Simple Formula
1992 (English)Report (Other academic)
In this paper an attempt is made to clarify the contribution of economic liberalization to the current transition from plan to market in Central and Eastern Europe and elsewhere. Three main points are made. First, national output can be increased by removing relative price distortions, even in a classical world where full employment prevails at all times. Second, the output gain from removing a single distortion in a two-sector general-equilibrium model with full employment is captured in a simple formula in which the gain is proportional to the square of the original distortion. Third, substitution of a plausible parameter values into the simple formula indicates that the permanent output gain from economic liberalization may be quite substantial, other things being equal.
Place, publisher, year, edition, pages
Stockholm: IIES , 1992. , 32 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 514
IdentifiersURN: urn:nbn:se:su:diva-41832OAI: oai:DiVA.org:su-41832DiVA: diva2:337914