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Price Liberalization, Money Growth, and Inflation During the Transition to a Market Economy

Author

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  • Ernesto Hernández-Catá

Abstract

This paper examines the influence of economic liberalization and monetary growth on inflation during the transition from central plan to market. It concludes that price decontrol had a substantial, one-time effect on the price level but no lasting effect on inflation; that economic liberalization broadly defined may have helped dampen price increases; and that monetary expansion has been the fundamental determinant of inflation in the region. The paper also finds that the intensity of liberalization has been related to geographic proximity to market economies, to the size of the underground economy, and to the degree of political freedom.

Suggested Citation

  • Ernesto Hernández-Catá, 1999. "Price Liberalization, Money Growth, and Inflation During the Transition to a Market Economy," IMF Working Papers 99/76, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:99/76
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    Cited by:

    1. Marek Dabrowski & Wojciech Paczynski & Lukasz Rawdanowicz, 2002. "Inflation and Monetary Policy in Russia: Transition Experience and Future Recommendations," CASE Network Studies and Analyses 0241, CASE-Center for Social and Economic Research.
    2. Martins Bitans & Dace Slakota & Ivars Tillers, 2001. "Price Dynamics in Latvia - Experience and Future Prospects," Working Papers 2001/01, Latvijas Banka.
    3. Martins Bitans, 2002. "Real Exchange Rate in Latvia (1994-2001)," Working Papers 2002/01, Latvijas Banka.

    More about this item

    Keywords

    Inflation; Liberalization; Price Decontrol; Money; Transition; price liberalization; transition countries; monetary expansion; economic liberalization;

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