How Tight is Too Tight? A Look at Welfare Implications of Distortionary Policies in Uzbekistan
AbstractSince independence in 1991, Uzbekistan has pursued a gradual approach to the transition from planned to market economy. This approach relied heavily on trade controls, directed credit, and large public investments. In addition, a number of financial sector measures were instituted that distorted resource allocation and increased transaction costs. As a result, while possibly preventing the contraction of output in the early 1990s, these policies led to disappointing economic outcomes and social conditions later on. The paper reviews the underlying distortions and presents survey-based evidence to support their existence and their detrimental impact on economic activity. Looking forward, the paper - using a representative agent framework to model existing financial sector distortions - offers some guidance regarding the likely implications of eliminating these distortions on key aggregate variables. It suggests that the elimination of these distortions will be welfare enhancing and will lead to higher levels of investment and capital stock.
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Bibliographic InfoArticle provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics.
Volume (Year): 3 (2006)
Issue (Month): 2 (December)
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financial sector distortions; transition; Uzbekistan;
Other versions of this item:
- David A. Grigorian & Edward R. Gemayel, 2005. "How Tight is Too Tight? A Look at Welfare Implications of Distortionary Policies in Uzbekistan," IMF Working Papers 05/239, International Monetary Fund.
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
- P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
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