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

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  • Huffman, Sonya K.
  • Johnson, Stanley R.

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 over estimate of welfare losses in transition economies. In this study virtual prices are used to calculate new cost of living indices (CLI). The results for Poland show that over 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 percent using Hausmanï¾’s virtual prices and by 75 percent using external proxy virtual prices.

Suggested Citation

  • Huffman, Sonya K. & Johnson, Stanley R., 2004. "Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework," Staff General Research Papers Archive 11158, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:11158
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    References listed on IDEAS

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    1. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    2. Maxim Boycko, 1992. "When Higher Incomes Reduce Welfare: Queues, Labor Supply, and Macro Equilibrium in Socialist Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 907-920.
    3. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 889-906.
    4. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    5. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    6. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, vol. 6(3), pages 399-422, September.
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    Cited by:

    1. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1091-1126.
    2. Fleissig, Adrian R. & Whitney, Gerald, 2011. "A revealed preference test of rationing," Economics Letters, Elsevier, vol. 113(3), pages 234-236.
    3. Guo, Zizhen, 2015. "Labor supply and expenditures: econometric estimation from Chinese household data," ISU General Staff Papers 201501010800005388, Iowa State University, Department of Economics.
    4. 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.
    5. 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.
    6. 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.
    7. Sonya K. Huffman & Marian Rizov, 2007. "The Rise of Obesity in Transition Economies: Theory and Evidence from the Russian Longitudinal Monitoring Survey," LICOS Discussion Papers 18507, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    8. Lerman, Zvi & Kislev, Yoav & Kriss, Alon & Biton, David, 2001. "Agricultural Output And Productivity In The Former Soviet Republic," Discussion Papers 14999, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    9. 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.
    10. Lerman, Zvi & Kislev, Yoav & Kriss, Alon & Biton, David, 2001. "Agricultural Output And Productivity In The Former Soviet Republics," 2001 Annual meeting, August 5-8, Chicago, IL 20471, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Huffman, Sonya Kostova & Rizov, Marian, 2008. "The rise of obesity in transition economies: theory and evidence from Russian longitudinal monitoring survey," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6556, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Huffman, Sonya Kostova & Ishdorj, Ariun & Jensen, Helen H., 2005. "Consumer Choices and Welfare Gains from New, Healthy Products: A Virtual Price Approach," 2005 Annual meeting, July 24-27, Providence, RI 19351, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. 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).

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