Causes of repressed inflation in the Soviet consumer market: Retail price subsidies, the siphoning effect, and the budget deficit
AbstractUsing recently available Soviet material, this paper analyses the causes of repressed inflation in the Soviet consumer market during 1965-1989. We found that retail price subsidies, which rose from 4% of state budget expenditure in 1965 to 20% in the late 1980s, intensified consumer market disequilibrium. The provision of these subsidies had negative effects on the market by maintaining the purchasing power of households for consumer goods and by increasing the budget deficit. Furthermore, the demand of enterprises for consumer goods without legitimate permission tended to increase during 1965-1989.
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Bibliographic InfoPaper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 9/2000.
Length: 45 pages
Date of creation: 07 Sep 2000
Date of revision:
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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
Web page: http://www.suomenpankki.fi/bofit_en/
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repressed inflation; Soviet Union; retail price; subsidies; siphoning effect; budget deficit;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-16 (All new papers)
- NEP-HIS-2007-09-16 (Business, Economic & Financial History)
- NEP-MAC-2007-09-16 (Macroeconomics)
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- Kim, Byung-Yeon & Kim, Suk Jin & Lee, Keun, 2007. "Assessing the economic performance of North Korea, 1954-1989: Estimates and growth accounting analysis," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 564-582, September.
- Harrison, Mark, 2010. "Forging Success: Soviet Managers and Accounting Fraud, 1943 to 1962," CAGE Online Working Paper Series 34, Competitive Advantage in the Global Economy (CAGE).
- Harrison, Mark, 2011. "Forging success: Soviet managers and accounting fraud, 1943-1962," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 43-64, March.
- Kim, Byung-Yeon, 2003. "Informal economy activities of Soviet households: size and dynamics," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 532-551, September.
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