We estimate a panel data model of household incomes in Hungary and Russia during the 1990s. The model allows for nonlinear dynamics in endogenous household incomes and for endogenous attrition. Our estimates reveal nonlinearity in the dynamics, consistent with the claim that income inequality is bad for growth in mean income. We do not find evidence of an unstable dynamic equilibrium, such that...

Alternative approaches to modelling distributional and welfare effects of changes in policy and the economic environment in developing and transition countries are surveyed. Microsimulations range from pure accounting approaches to models with behavioural equations based on econometric estimates and various dynamic models. Microsimulation accounting models are key to analysing the impact effect...

Investment has been found to be a significant determinant of growth. This paper analyses the effects of institutions and transition progress on investment rates of transition economies since the collapse of the Socialist Bloc. Political institution is measured by the Freedom House’s Political Rights and Civil Liberties indexes; economic institution is proxied by the Index of Economic Freedom co...

We analyze the causes and mechanisms of inequality in Post-Soviet Union transition economies. First, we show that both economic globalisation – namely, import, export, and foreign direct investment – and institutional factors – namely, privatisation reforms, labour market liberalisation, and product market liberalisation – are strongly associated with within-country rises in inequality. However...