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The Second Economy and the Destabilizing Effect of Its Growth on the State Economy in the Soviet Union, 1965-1989

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  • Treml, Vladimir G.
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    Abstract

    The authors suggest that the rapid growth of the illegal underground economy in 1970s and 1980s has destabilized the Soviet state economy and weakened the mechanism of central planning. This hypothesis is advanced on the basis of the examination of striking decline in income (legal) elasticities of demand for a number of consumer goods purchased in state retail trade in Russia and Ukraine. The growth of income from illegal sources and purchases of consumer goods in black markets explains this phenomenon.

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    File URL: http://www.econ.duke.edu/Papers/Abstracts/abstract.95.33.html
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    Bibliographic Info

    Paper provided by Duke University, Department of Economics in its series Working Papers with number 95-33.

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    Date of creation: 1995
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    Handle: RePEc:duk:dukeec:95-33

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    Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
    Phone: (919) 660-1800
    Fax: (919) 684-8974
    Web page: http://econ.duke.edu/

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