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The causes of recession following stabilization

By Stanislaw Gomulka and Paul Johnson

Abstract

This paper attempts the following two questions, both with reference to the response of the Polish economy to the stabilization and liberalization plan of January 1, 1990: why was the fall in output much larger and the inflation rate much higher than anticipated? Was the contraction of aggregate demand excessive? The paper argues that there is evidence for an excessively contractionary macroeconomic policy in the first quarter of 1990, but the policies in the second half of 1990 were, if anything, too expansionary. New interpretation is offered on the impact of devaluation on activity and on the reasons for understanding the inflation rate

Topics: HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 1991
OAI identifier: oai:eprints.lse.ac.uk:21107
Provided by: LSE Research Online
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