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

Author/Editor:

Ernesto Hernández-Catá

Publication Date:

June 1, 1999

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1999/076

Subject:

Consumer prices Conventional peg Foreign exchange Inflation Monetary expansion Monetary policy Price controls Prices

English

Publication Date:

June 1, 1999

ISBN/ISSN:

9781451849851/1018-5941

Stock No:

WPIEA0761999

Pages:

24

Please address any questions about this title to publications@imf.org