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On the Role of Wages in the Ukrainian Transition Process: An empirical Investigation

Author

Listed:
  • Olivier Hueber
  • Gioacchino Fazio

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

Abstract

There are two intriguing questions about the transition process undertaken by the Ukraine since its declaration of sovereignty in December 1991. (i) Why had one of the more prosperous republics of the former USSR in terms of economic development and population welfare been suffering of both a persistent and high inflation during the four first years of its young existence ? (ii) How - in the early months of 1996 - could the Ukrainian efficiently put an end to the skyrocketing of prices ? The aim of this paper is to understand how such an outstanding reversal of situation could occur. Firstly, in support of a cointegration test, we assert that between January 1992 and November 1995, the Ukraine was faced with a complex monetary regime in which wage was the economic variable through which most of the inflationary pressures passed, directly or indirectly. Secondly, we explain that since the beginning of 1996, the existent monetary regime has been replaced by a new one in which inflation is contained but wages and pensions arrears increase quickly. Such a situation is not sustainable in the short and we outline possible remedies.

Suggested Citation

  • Olivier Hueber & Gioacchino Fazio, 1998. "On the Role of Wages in the Ukrainian Transition Process: An empirical Investigation," Post-Print hal-00440939, HAL.
    • Handle: RePEc:hal:journl:hal-00440939
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    References listed on IDEAS

    as
    1. Halushka, Andrij & Savluk, Sergei & Wörgötter, Andreas, 1994. "Ukrainian Hyperinflation: History, Analysis, Recommendations," East European Series 10, Institute for Advanced Studies.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    3. Cukierman Alex, 1992. "Central Bank Strategy, Credibility, And Independance: Theory And Evidence," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 1-10, December.
    4. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Paper 1227, Economics Department, Queen's University.
    5. Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-555, June.
    6. Olivier Hueber, 1995. "The Abnormally Persistent and High Inflation in Ukraine," Post-Print hal-00819121, HAL.
    7. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    8. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-1056, September.
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    More about this item

    Keywords

    Cointegration; monetary regime; inflation; Ukraine; wages;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

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