The Role of Macroeconomic Policy in the Process of Economic Stabilisation in Central Europe

The Central European Region includes 4 countries: 1. the Czech Republic, 2. Hungary, 3. Poland, and 4. Slovakia. The countries of Central Europe took important steps in 1990-1991 to dismantle their command economies and to rely more on market forces. The 40 years of the so-called socialist economy caused significant deformation of the structure, quality, and effectiveness of the Central European economies. A considerable part of the output was for: 1. exports to the USSR and other socialist and 3rd world countries, 2. the production of arms, and 3. out-dated production for domestic use. Experience of the Central European countries has proven that the transition from central planning to a market economy is feasible. Satisfactory levels of economic stability may be reached, provided that restrictive macroeconomic policy is implemented. However, macroeconomic policy should not be over-restrictive as it may contribute to a deeper decline in output. The Czech Republic has reached the highest level of macroeconomic stability within the Central European Region in the past year and has the best prospects for the future.