Forced Savings and Repressed Inflation in the Soviet Union: Some Empirical Results

IMF Working Papers, June 1, 1991

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Forced Savings and Repressed Inflation in the Soviet Union: Some Empirical Results

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Bibliographic details

• Authors: Mario I. Bléjer, Carlo Cottarelli
• Published: June 1, 1991
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451847550.001

Authors and Publication

• By Mario I. Bléjer, Carlo Cottarelli
• Publication date: June 1, 1991
• Series: Working Paper No. 1991/055
• Issue: 055
• Pages: 62
• DOI: https://doi.org/10.5089/9781451847550.001
• ISBN: 9781451847550
• ISSN: 1018-5941
• Stock No: WPIEA0551991

Research Question and Motivation

• In countries such as the Soviet Union, where wealth is mainly stored in monetary assets, the behavior of the money to income ratio is a poor indicator of the growth of undesired monetary balances (monetary overhang).
• A monetary overhang in such contexts is primarily a wealth overhang, requiring analysis of deviations of actual from desired wealth holdings.
• Addressing this requires an empirical analysis of consumption and saving decisions.

Methodology

• Presents estimates of a consumption function for the Soviet Union.
• Empirical analysis focuses on consumption and saving behavior to evaluate wealth/monetary overhang.

Key Findings and Results

• The paper derives an evaluation of the monetary overhang existing at the end of 1990 from the estimated consumption function.
• Subject areas covered: Consumption, Disposable income, Household consumption, Income, Inflation, National accounts, Prices.
• Keywords used in the analysis include: consumer goods; Consumption; consumption behavior; consumption expenditure; Disposable income; equation C; excess demand; Household consumption; Income; Inflation; liberalization policy; price level; price liberalization; round price effect; saving propensity; wealth overhang; WP.

Policy-Relevant Insights

• Because monetary overhang in the Soviet Union is primarily a wealth overhang, policy analysis should focus on consumption and saving behavior rather than solely on money-to-income ratios.
• Evaluations of price liberalization and liberalization policy effects on consumption and saving are central to understanding repressed inflation dynamics.

Source: IMF Working Papers, "Forced Savings and Repressed Inflation in the Soviet Union: Some Empirical Results" by Mario I. Bléjer and Carlo Cottarelli (June 1, 1991), Working Paper No. 1991/055.