TRANSFORMATIONAL RECESSION - THE MAIN CAUSES

All the post-socialist countries are in deep recession. This study dis cusses the common features of these recessions, using the Hungarian ec onomy as an example. The author starts by considering the following ge neral reasons for the phenomenon: (1) the shift from a sellers' to a b uyers' market, (2) the transformation of the real structure of the eco nomy, (3) the disturbances in the coordination mechanisms, (4) the mac roeconomic consequences of the hardening of financial discipline, and (5) the backwardness of the financial system. Two components of macro- demand, investment and exports, are then examined. The most important factor here is the dwindling propensity to invest. Finally, a summary of the conclusions to be drawn from the analysis is given. There are g ood reasons for placing the tasks of emerging from the recession at th e top of the list of economic-policy priorities, but it is important t o do so without permitting an acceleration of inflation or a resumed i ncrease in indebtedness. (C) 1994 Academic Press, Inc.