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Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework

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  • Sonya Kostova Huffman

    (Iowa State University)

  • Stanley R. Johnson

    (Iowa State University)

Abstract

The costs of shortages and rationing are not captured by standard consumer price indices. Thus the change in real GDP per capita is an overestimate of welfare losses in transition economics. In this study virtual prices are used to calculate new cost-of-living indices (CLIs). The results for Polant show that from 1987 to 1992 the CLI ignoring the rationing effects is biased upward from 1.53 to 3.71 percentage points per year. Compared to the estimates of welfare loss that neglect the rationing effects during the prereform period, the estimated welfare losses that reflect the rationing are reduced by 50% using Hausman' virtual prices and by 75% using external proxy virtual prices. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Sonya Kostova Huffman & Stanley R. Johnson, 2004. "Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 626-636, May.
    • Handle: RePEc:tpr:restat:v:86:y:2004:i:2:p:626-636
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    Cited by:

    1. Huffman, Sonya Kostova & Johnson, Stanley R., 2004. "Empirical tests of impacts of rationing: the case of Poland in transition," Economic Systems, Elsevier, vol. 28(1), pages 79-99, March.
    2. Fleissig, Adrian R. & Whitney, Gerald, 2011. "A revealed preference test of rationing," Economics Letters, Elsevier, vol. 113(3), pages 234-236.
    3. Lerman, Zvi & Kislev, Yoav & Biton, David & Kriss, Alon, 2003. "Agricultural Output and Productivity in the Former Soviet Republics," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 999-1018, July.
    4. Fleissig, Adrian R. & Whitney, Gerald, 2013. "Virtual prices and the impact of house rationing in Belgium on consumer choices," Explorations in Economic History, Elsevier, vol. 50(2), pages 308-315.
    5. Ciaian, Pavel & Swinnen, Johan F.M., 2007. "Distortions to Agricultural Incentives in Central and Eastern Europe," Agricultural Distortions Working Paper Series 48385, World Bank.
    6. Huffman, Wallace, 2006. "The Story Behind the Post-War Decline in Women's Housework: Prices, Income, Family Size, and Technology Effects in a Demand System," Staff General Research Papers Archive 12601, Iowa State University, Department of Economics.
    7. Adrian R. Fleissig & Gerald A. Whitney, 2014. "Estimating demand elasticities under rationing," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 432-440, February.
    8. repec:isu:genstf:201501010800005388 is not listed on IDEAS
    9. Huffman, Sonya K. & Ishdorj, Ariun & Jensen, Helen H., 2005. "Consumer Choices and Welfare Gains from New, Healthy Products: A Virtual Prices Approach," ISU General Staff Papers 200501010800001012, Iowa State University, Department of Economics.
    10. Johan Swinnen & Kym Anderson, 2008. "Distortions to Agricultural Incentives in Europe's Transition Economies," World Bank Publications - Books, The World Bank Group, number 6502, April.
    11. Taniguchi, Kiyoshi, 2001. "A General Equilibrium Analysis Of Japanese Rice Market Trade Liberalization," 2001 Annual meeting, August 5-8, Chicago, IL 20660, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Fleissig, Adrian R. & Whitney, Gerald A., 2015. "Belgium relief fund, post war food shortages and the “True” cost of living," Explorations in Economic History, Elsevier, vol. 58(C), pages 93-106.
    13. Huffman, Sonya K. & Rizov, Marian, 2007. "Determinants of obesity in transition economies: The case of Russia," Economics & Human Biology, Elsevier, vol. 5(3), pages 379-391, December.
    14. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1091-1126.

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