This paper analyzes the performance of the Central and Eastern European (CE
E) transition economies in terms of their convergence in selected macroecon
omic fundamentals. The analysis is carried out within distinctive groups of
countries to reflect different institutional and geographical aspects of t
ransition. We have found evidence of convergence in macroeconomic fundament
als among the CEE countries in general and have shown that common instituti
onal attributes and economic policies tend to correlate with a higher degre
e of convergence. This finding is in line with neoclassical growth theory t
hat supports the occurrence of convergence among similar countries. J. Comp
. Econ., March 2001, 29(1), pp. 1-23. Center for Graduate Education and Eco
nomic Research-Economics Institute (CERGE-EI); Prague 111 21, Czech Republi
c: The William Davidson Institute of the University of Michigan Business Sc
hool, Ann Arbor, Michigan 48109; and Centre for Economic Policy Research (C
EPR), London EC1V 7RR, United Kingdom. (C) 2001 Academic Press.