Determinants of Inflation in Poland: A Structural Cointegration Approach

Using cointegration and error-correction models, this paper analyses the relative impacts of the monetary, labour and foreign sectors on Polish inflation from 1990 to 1999. Following the development of a theoretical framework, we use a structural system approach in which cointegration relationships are used to derive deviations from steady-state levels. The deviations are interpreted as excess demand pressure on inflation in a given sector and subsequently incorporated in order to determine the short-run dynamics of Polish inflation. The results suggest that the labour and external sectors dominated the determination of Polish inflation during the above period, but their effects have been opposite since 1994. The appreciation of the domestic currency contributed to reducing inflation, while excessive wage increases prevented inflation from decreasing to a lower level. The monetary sector appears not to have exerted influence on inflation, suggesting monetary policy has been passive.inflation; cointegration; error correction mechanism; Poland

Informal Economy Activities and Entrepreneurship in Russia

This paper uses the Russian Longitudinal Monitoring Survey (RLMS) from 1998 to 2004 to analyze the effect of previous informal economy activities on the creation of official entrepreneurship. We find that previous participation in the informal economy is positively associated with the probability to become registered entrepreneurs in the present. We also find that that self-employment is used as a transition mechanism to entrepreneurship and moonlighters in the past are more active in actual job changes. Furthermore, a survival function analysis suggests that previous experience as self-employed moonlighters enhances the probability of success as official entrepreneur. Workers who moonlighted as selfemployed in the past represent 16-22% of the new entrepreneurs. --Informal economy,entrepreneurs,Russia

Plan, siphoning and corruption in the Soviet command economy

This paper reconsiders Andrei Shleifer and Robert Vishny’s suggestion that a socialist industry will always prefer to cut both price and output relative to a market–clearing equilibrium in order to maximise bribe income. The evidence from recent archival studies of the Soviet economy does not support this conjecture. To understand the evidence we present an analytical framework within which a plan–setter and an effort–setter interact, subject to a hard resource constraint, to determine real output and hidden inflation simultaneously. We find that managers who use resources gained corruptly were enabled to produce more real output with less hidden inflation and fulfil the plan more honestly as a result. We find clear rationales for plan–setters to have tolerated corruption and siphoning while maintaining plan tension, and we associate reduced plan tension in the 1970s with the spread of disloyal behaviours

The political economy of reforms: Empirical evidence from post-communist transition in the 1990s

Using a novel data set from post-communist countries in the 1990s, this paper examines linkages between political constraints, economic reforms and growth. A dynamic panel analysis suggests public support for reform is negatively associated with income inequality and unemployment. Both the ex post and ex ante political constraints of public support affect progress in economic reform, which in turn influences economic growth. The findings highlight that while economic reforms are needed to foster growth, they must be designed so that they do not undermine political support for reform.political constraints; economic reform; transition; growth; dynamic panel models

The political economy of reforms: Empirical evidence from post- communist transition in the 1990s

Using a novel data set from post-communist countries in the 1990s, this paper examines linkages between political constraints, economic reforms and growth. A dynamic panel analysis suggests public support for reform is negatively associated with income inequality and unemployment. Both the ex post and ex ante political constraints of public support affect progress in economic reform, which in turn influences economic growth. The findings highlight that while economic reforms are needed to foster growth, they must be designed so that they do not undermine political support for reform.Political constraints, economic reform, transition, growth, dynamic panel models

The Dynamics of Moonlighting: What is happening in the Russian informal economy?

This paper uses rounds 5 to 8 of the Russian Longitudinal Monitoring Survey (RLMS) to analyse the dynamics of moonlighting of working-age population. We find that moonlighting is transitory, and is generally associated with career shifts. Those respondents who expressed a desire to switch jobs in the past are in fact more likely to moonlight in the present, and to effectively switch jobs in the future. The career shifts tend to be towards self-employed activities. These results imply that the Russian secondary labour market, as part of the informal economy, can provide long-term benefits for the economy as an effective incubator for setting up new self-employed businesses.moonlighting; informal economy; labour supply

The Political Economy of Reforms: Empirical Evidence from Post-Communist Transition in the 1990s

Using a novel data set from post-communist countries in the 1990s, this paper examines the link-ages between political constraints, economic reforms and growth. Results from a dynamic panel analysis suggest that public support for reform is negatively associated with increases in income inequality and unemployment. In addition, both ex post and ex ante political constraints referring to the extent of public support affect progress in economic reforms, which in turn determines eco-nomic growth. These findings highlight that while economic reforms are needed to foster growth, they must be designed in such a way that they do not undermine political support for reform.political constraints, economic reform, transition, growth, dynamic panel models

Equilibrium Exchange Rates in Transition Countries: Evidence from Dynamic Heterogeneous Panel Models

We use a dynamic heterogeneous panel model to estimate real equilibrium exchange rates for advanced transition countries. Our method is based on out-of-sample estimations from middle-income and high-income countries, and we use a pooled mean group estimator. We find that exchange rates have converged in recent years in five transition countries (Czech Republic, Hungary, Poland, Slovakia, and Slovenia) with real equilibrium exchange rates expressed in the US dollars. However, we also find that the currencies of the transition countries studied are substantially overvalued if real effective exchange rates are used.exchange rates; transition economies; dynamic heterogeneous panel estimations

The Unofficial Economy in Russia

This paper provides the various estimates of Russia’s unofficial economy during the transition period and discusses the estimation methods of the unofficial economy. It suggests that Russia’s unofficial economy, which substantially increased during the early 1990s and stands still high compared to other countries, is caused by the institutional and cultural legacy from the Soviet era and problems in the transition period such as poor quality of institutions and newly available opportunities. It emphasizes the importance of understanding the evolution of the unofficial economy over time and its heterogeneity across countries.

Causes of repressed inflation in the Soviet consumer market: Retail price subsidies, the siphoning effect, and the budget deficit

Using recently available Soviet material, this paper analyses the causes of repressed inflation in the Soviet consumer market during 1965-1989. We found that retail price subsidies, which rose from 4% of state budget expenditure in 1965 to 20% in the late 1980s, intensified consumer market disequilibrium. The provision of these subsidies had negative effects on the market by maintaining the purchasing power of households for consumer goods and by increasing the budget deficit. Furthermore, the demand of enterprises for consumer goods without legitimate permission tended to increase during 1965-1989.repressed inflation; Soviet Union; retail price; subsidies; siphoning effect; budget deficit;