Control or Decontrol? Theoretical arguments for policy making in transition

Abstract

After a period of reform of the CPE model, some fundamental issues remain interesting, such as how to treat markets and planning, and how to reform. The historical debates between the 'Disequilibrium School' and the 'Shortage School' have never been clearly concluded. The chronic-excess-demand hypothesis has by no means been shown to be correct. Some literature overlooks the important differences between CPEs and RCPEs in terms of the nature and functioning of economic institutions. Actually, financial crisis in CPEs and RCPEs are outcomes of a set of complex factors, notably the decontrolling of the financial and banking systems. To address the extreme importance of financial control in transition, econometrics still looks not so powetful.