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Sustained inflation in response to price liberalization

Author

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  • Conway, Patrick

Abstract

The author demonstrates that sustained inflation is a predictable response to price liberalization in the countries of the former Soviet Union. The author models the phenomenon in a dynamic macroeconomic framework,and demonstrates the immediate price jump followed by sustained inflation that has characterized the transitional economies of the former Soviet Union. The author supports the theoretical derivation with a simulation exercise that demonstrates the scope of sustained inflation for specific parameters.

Suggested Citation

  • Conway, Patrick, 1994. "Sustained inflation in response to price liberalization," Policy Research Working Paper Series 1368, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1368
    as

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    References listed on IDEAS

    as
    1. Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-963, September.
    2. Campbell, John Y, 1987. "Does Saving Anticipate Declining Labor Income? An Alternative Test of the Permanent Income Hypothesis," Econometrica, Econometric Society, vol. 55(6), pages 1249-1273, November.
    3. Dornbusch, Rudiger, 1992. "Lessons from Experiences with High Inflation," World Bank Economic Review, World Bank Group, vol. 6(1), pages 13-31, January.
    4. International Monetary Fund, 1992. "Bank Insolvency and Stabilization in Eastern Europe," IMF Working Papers 92/9, International Monetary Fund.
    5. Reinhart, Carmen & Ostry, Jonathan, 1991. "Private Saving and Terms of Trade Shocks," MPRA Paper 13716, University Library of Munich, Germany.
    6. Conway, Patrick, 1994. "The economics of cash shortage," Policy Research Working Paper Series 1367, The World Bank.
    7. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
    8. Ickes, B.W. & Ryterman, R., 1992. "Inter-Enterprise Arrears and Financial Underdevelopment in Russia," Papers 9-92-6, Pennsylvania State - Department of Economics.
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