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A Monetary Model of a Shortage Economy

Author

Listed:
  • Shoukang Lin

    (International Monetary Fund)

Abstract

During the transition from centrally planned economies to market economies, many countries have experienced macroeconomic instability. This paper develops a monetary model to show how macroeconomic stability and instability can materialize in a rigidly planned economy with inherent structural imbalances and an irrational price system. The study shows that, without hardening enterprise budget constraints, wage and price liberalization may destabilize an economy and lead to persistent budget deficits and inflation. The paper also analyzes household savings and money demand in a shortage economy, clarifying the somewhat confusing concept of "monetary overhang" in the literature.

Suggested Citation

  • Shoukang Lin, 1993. "A Monetary Model of a Shortage Economy," IMF Staff Papers, Palgrave Macmillan, vol. 40(2), pages 369-394, June.
  • Handle: RePEc:pal:imfstp:v:40:y:1993:i:2:p:369-394
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    Cited by:

    1. Debra Patterson, 1999. "An open-economy transition model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(1), pages 24-36, February.
    2. Filippov, Mikhail G, 2002. "Russian Voting and the Initial Economic Shock of Hyperinflation," Public Choice, Springer, vol. 111(1-2), pages 73-104, March.
    3. Ben R. Van Leeuwen & R. Jak McCarroll & Robert W. Brander & Ian L. Turner & Hannah E. Power & Anthony J. Bradstreet, 2016. "Examining rip current escape strategies in non-traditional beach morphologies," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 81(1), pages 145-165, March.
    4. repec:kap:iaecre:v:5:y:1999:i:1:p:24-36 is not listed on IDEAS

    More about this item

    JEL classification:

    • D59 - Microeconomics - - General Equilibrium and Disequilibrium - - - Other
    • P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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