Oslo Summer School in Comparative Social Science Studies 1997

The Economics of Transition

Main Discipline: Economics
Lecturer: Professor G�rard Roland
Institution: Universit� Libre de Bruxelles, Belgium
Dates: 5 August - 8 August, 1997

The course focuses on topics related to transitional economies, in particular economies where large-scale institutional changes are required or wanted. The concrete is the massive institutional changes that are currently being experienced by the previously socialist economies: in Russia and Eastern Europe, radical changes towards a capitalist type of system have been initiated. In China as well, changes are taking place in the direction of capitalist production and organizational structures. An important aspect of the analysis will be the comparison of "big bang" strategies versus more gradualist strategies, i.e. whether a sudden or a softer transition from a socialist-type to a capitalist-type system should be preferred, and the conditions favoring each of the two types of strategies.

The course will cover the following topics:

  1. Transition as a process of large-scale institutional change.
  2. Aggregate uncertainty, complementarities and the optimal speed of reforms.
  3. Political constraints and the speed of reform.
  4. The optimal speed of allocative changes
  5. The speed of price liberalization.
  6. Liberalization and the output fall.
  7. Incentive problems of socialist firms: the soft budget constraint and the ratchet effect.
  8. Privatization policies and enterprise restructuring.
  9. Decentralization of government in China.
  10. The soft budget constraint and financial reform.

Basic readings


The lecturer
G�rard Roland (Ph.D. in Economcs from U.L.B. 1988) is a Professor in Economics at Universit� Libre de Bruxelles (U.L.B) since 1991. He is also Programme Director on "Transition Economics" at C.E.P.R., where he has been a Research Fellow since 1991. His research interests are within the field of economics of transition and the theory of economic incentives. Roland has published numerous articles in different journals among them Review of Economic Studies, European Economic Review and American Economic Review. He is co-author of the book Flexible Integration. Towards a More Effective and Democratic Europe, with M Dewatripont, F. Giavazzi, J. von Hagen, I. Harden, T. Persson, H. Rosenthal, A. Saphir, and G. Tabellini, CEPR Series, Monitoring European Integration no. 6, London, 1995.