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Empirical tests of impacts of rationing: the case of Poland in transition

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  • Huffman, Sonya Kostova
  • Johnson, Stanley R.

Abstract

This study tests the theory of rationing, examining changes in household consumption behavior during the transition to a market economy in Poland, 1987-92. Using pre-reform data from the Polish Household Budget Survey, Huffman and Johnson develop a model of consumption under rationing and derive virtual prices for food and housing. A pre-reform Almost Ideal Demand System (AIDS) model with rationing is then used to estimate plausible values for price and income elasticities. Comparing pre-reform and post-reform (without rationing) AIDS models shows that own-price elasticities for nonrational goods are larger after the reform, and there is increased complementarity and decreased substitutability for nonrationed goods. This comparison also shows a 75 percent decline in real household welfare over the transition to a market economy.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 28 (2004)
Issue (Month): 1 (March)
Pages: 79-99

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Handle: RePEc:eee:ecosys:v:28:y:2004:i:1:p:79-99

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  1. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  2. Subramanian, Shankar & Deaton, Angus, 1996. "The Demand for Food and Calories," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 133-62, February.
  3. Antoni Chawluk & Rod Cross, 1994. "The real balance effects of price liberalization in Poland 1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 487-499, December.
  4. Wang, Zhi & Chern, Wen S., 1992. "Effects of rationing on the consumption behavior of Chinese urban households during 1981-1987," Journal of Comparative Economics, Elsevier, vol. 16(1), pages 1-26, March.
  5. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521433297, October.
  6. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
  7. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
  8. Podkaminer, Leon, 1988. "Disequilibrium in Poland's consumer markets: Further evidence on intermarket spillovers," Journal of Comparative Economics, Elsevier, vol. 12(1), pages 43-60, March.
  9. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
  10. Kim, Byung-Yeon, 1999. "The Income, Savings, and Monetary Overhang of Soviet Households," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 644-668, December.
  11. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, vol. 6(3), pages 399-422, September.
  12. Huffman, Sonya K. & Johnson, Stanley R., 2004. "Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework," Staff General Research Papers 11158, Iowa State University, Department of Economics.
  13. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, October.
  14. Podkaminer, Leon, 1982. "Estimates of the Disequilibria in Poland's Consumer Markets, 1965-1978," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 423-31, August.
  15. Kalwij, A.S. & Alessie, R.J.M. & Fontein, P.F., 1998. "Household commodity demand and demographics in The Netherlands: A microeconometric analysis," Open Access publications from Tilburg University urn:nbn:nl:ui:12-78952, Tilburg University.
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