Price Reform and Durable Goods in the Transition to a Market Economy

Pierre-Richard Agénor

No 1993/047, IMF Working Papers from International Monetary Fund

Abstract: The paper examines the short- and long-term effects of price liberalization in a reforming socialist economy. The analysis is based on an optimizing framework that highlights hoarding behavior and the existence of parallel goods markets. The behavior of official and parallel market prices, stock of durables, and the velocity of money in the transition period between reform announcement and reform implementation is characterized, in the presence and absence of uncertainty about the transition date.

Keywords: WP; market price; durable goods; price liberalization; socialist economy; nominal interest rate; liberalization program; excess demand; stock of durables; free market; Stocks; Inflation; Price controls; Asset prices; Real interest rates; Eastern Europe (search for similar items in EconPapers)
Pages: 36
Date: 1993-06-01
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