Title: The shock therapy model of transition

Authors: John Marangos

Addresses: Department of Economics, Colorado State University, 1771 Campus Delivery, Fort Collins, CO 80523-1771, USA

Abstract: The aim of this paper is to develop a comprehensive analysis of the shock therapy model of transition. As such the model requires an analysis of what I define as the primary elements: economic analysis, definition of a good society, speed, political structure, ideological structure and initial conditions. Also it is necessary to develop an appropriate mechanism of implementation, what I define as the secondary elements: price liberalisation-stabilisation, privatisation, institutional structure, monetary policy and the financial system, fiscal policy, international trade and foreign aid and social policy. In addition, there was a need for a strategy by which the reform program would be implemented. In the conclusion an assessment of the shock therapy model as a political strategy takes place.

Keywords: shock therapy; transition; reforms sequence; emerging economies; economic policy; economic analysis; political structure; ideological structure; price liberalisation; price stabilisation; privatisation; institutional structure; monetary policy; financial systems; fiscal policy; international trade; foreign aid; social policy; political strategy.

DOI: 10.1504/IJEPEE.2007.015583

International Journal of Economic Policy in Emerging Economies, 2007 Vol.1 No.1, pp.88 - 123

Published online: 31 Oct 2007 *

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