The Theory and Measurement of Macroeconomic Disequilibrium in Centrally Planned Economies

A Simple Monetary Model of a Shortage Economy

“…To make the analysis more focused, here we only consider wage reform, leaving the study of price reform for the next section. Specifically, we \J This result contrasts with the considerable discussion about disequilibrium and "monetary overhang" (or "repressed inflation") in a centrally planned economy in the literature (Nuti (1986) and Fortes (1989)). Our findings are consistent with Cottarelli and Blejer (1991), where they found little evidence about monetary overhang in the former Soviet Union between 1964 and 1985. consider two types of wage reform: the first allows profitable firms to retain a fixed percentage of their profits as funds for wage increases; the second type of reform is to allow profitable firms to share profits with workers (some kind of bonus scheme).…”

Money and the consumption goods market in China

“…The theory and measurement of macroeconomic disequilibrjnm in CPEs, with primary attention to the consumption goods market, are surveyed in Fortes (1986). Our own approach, applied to the East European economies, is set out in several papers cited individually in the References below.…”

Stabilization and exchange rate policy in Romania*

“…Strain can be seen as a measure of the required resource reallocation 'in an econoinic system which undergoes dramatic changes in relative prices; it can be illustrated by the ratio: J = EP;I4;-4;1 where (p*) and (q*) refer to cquilibriuln price and quantity values, whereas (p) and (4) correspond to the distorted (inheritcd) resource allocation. J can be viewed as il measure of aggregate disequilibrium in the system as against the vector of equilibrium prices and quantities (See also Richard Portes, 1986 ). The higher the strain (J), the higher the uncmployincnt that would be associated with an instantaneous complete resource rc;illocation.…”