How Tight is Too Tight? A Look at Welfare Implications of Distortionary Policies in Uzbekistan

 
Author/Editor: Gemayel, Edward R. ; Grigorian, David A.
 
Publication Date: December 01, 2005
 
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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: Since independence in 1991, Uzbekistan has pursued a gradual approach to the transition from planned to market economy. This approach relied heavily on trade controls, directed credit, and large public investments. A number of financial sector measures were also instituted that distorted resource allocation and increased transaction costs. As a result, while possibly preventing the contraction of output in the early 1990s, these policies led to disappointing economic outcomes and social conditions. The paper reviews the underlying distortions and presents survey-based evidence to support their existence and their detrimental impact on economic activity. Looking forward, the paper-using a representative agent framework to model existing financial sector distortions-offers some guidance regarding the likely implications of eliminating the observed distortions on key aggregate variables. It suggests that the elimination of these distortions will enhance welfare and lead to increased investment and capital stock.
 
Series: Working Paper No. 05/239
Subject(s): Centrally planned economies | Economic models | Financial sector | Investment | Transition economies | Uzbekistan

Author's Keyword(s): Uzbekistan | financial sector distortions | transition
 
English
Publication Date: December 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005239 Pages: 32
Price:
US$15.00 (Academic Rate:
US$15.00 )
 
 
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