Convergence in Output in Transition Economies Central & Eastern Europe, 1970-1995

Abstract

In this paper we use unit roots/cointegration analysis and time varying parameters procedure 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, either 1970-1990 or under the early years of reform are included, 1970-1995.