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

Ernesto Hernández-Catá

No 1999/076, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; price; price liberalization; liberalization; liberalization variable; Price Decontrol; Money; Transition; original de Melo-Denizer-Gelb liberalization index; original de Melo-Denzier-Gelb liberalization index; liberalization effort; equilibrium price price level; Price controls; Inflation; Consumer prices; Monetary expansion; Conventional peg; Central and Eastern Europe; Eastern Europe (search for similar items in EconPapers)
Pages: 24
Date: 1999-06-01
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Citations: View citations in EconPapers (6)

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