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The causes of recession following stabilization


  • Gomulka, Stanislaw
  • Johnson, Paul


This paper attempts the following two questions, both with reference to the response of the Polish economy to the stabilization and liberalization plan of January 1, 1990: why was the fall in output much larger and the inflation rate much higher than anticipated? Was the contraction of aggregate demand excessive? The paper argues that there is evidence for an excessively contractionary macroeconomic policy in the first quarter of 1990, but the policies in the second half of 1990 were, if anything, too expansionary. New interpretation is offered on the impact of devaluation on activity and on the reasons for understanding the inflation rate.

Suggested Citation

  • Gomulka, Stanislaw & Johnson, Paul, 1991. "The causes of recession following stabilization," Economic History Working Papers 21107, London School of Economics and Political Science, Department of Economic History.
  • Handle: RePEc:ehl:wpaper:21107

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    Cited by:

    1. Stanislaw Gomulka & Danny Quah, 1994. "Lessons from Economic Transformation and the Road Forward," CEP Occasional Papers 05, Centre for Economic Performance, LSE.
    2. Stanislaw Gomulka, 1994. "Lessons from Economic Transformation and the Road Forward," CASE Network Studies and Analyses 0017, CASE-Center for Social and Economic Research.
    3. Martin Raiser, 1995. ""Transition is a bridge, therefore do not dwell upon it" 1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(2), pages 215-246, June.
    4. Raiser, Martin & Nunnenkamp, Peter, 1993. "Output decline and recovery in Central Europe: the role of incentives before, during and after privatisation," Kiel Working Papers 601, Kiel Institute for the World Economy (IfW).
    5. Holger Schmieding, 1993. "From plan to market: On the nature of the transformation crisis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 129(2), pages 216-253, June.
    6. Ariane Tichit, 1998. "Reprise économique dans les pays post-communistes : application d'un modèle de durée," Économie et Prévision, Programme National Persée, vol. 136(5), pages 73-92.
    7. Jan Winiecki, 2002. "An Inquiry into the Early Drastic Fall of Output in Post-communist Transition: An Unsolved Puzzle," Post-Communist Economies, Taylor & Francis Journals, vol. 14(1), pages 5-29.
    8. Perkins, Frances C., 1994. "State enterprise reform and macro-economic stability in transition economies," Kiel Working Papers 665, Kiel Institute for the World Economy (IfW).
    9. Raiser, Martin, 1993. "Governing the transition to a market economy," Kiel Working Papers 592, Kiel Institute for the World Economy (IfW).
    10. Raiser, Martin, 1994. "Lessons for whom, from whom? The transition from socialism in China and Central Eastern Europe compared," Kiel Working Papers 630, Kiel Institute for the World Economy (IfW).
    11. ter Horst, H.A.F., 1996. "Socialism, Capitalism, and Transition with Special Reference to Poland," Other publications TiSEM 58e2e881-80c1-45a0-8ce8-7, Tilburg University, School of Economics and Management.
    12. Gomulka, S. & Lane, J., 1997. "Recession dynamics following an external price shock in a transition economy," Structural Change and Economic Dynamics, Elsevier, vol. 8(2), pages 177-203, June.
    13. Raiser, Martin, 1992. "Soft budget constraints: An institutional interpretation of stylised facts in economic transformation in Central Eastern Europe," Kiel Working Papers 549, Kiel Institute for the World Economy (IfW).

    More about this item

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General


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