IMPACT OF REGULATED PRICE ADJUSTMENTS ON PRICE VARIABILITY IN A VERY LOW INFLATION TRANSITION ECONOMY: CASE OF ARMENIA

The impact of macroeconomic management (monetary policy) and administrative price adjustments on price variability in a low inflation economy characterized by relatively frequent administrative price adjustments is examined. Fluctuations of market determined prices, prices of agricultural goods in particular, are linked to the lack of synchronization between administrative price changes and monetary policy. If monetary policy does not account for expected changes in administrative prices, demand in “free” goods markets will shift causing fluctuation of prices for agricultural goods, because the supply of these goods is highly inelastic in Armenia. The findings contribute to a better understanding of agricultural price variability during 1998-2002. The impact of macroeconomic policy and structural adjustments on income distribution and rural poverty incidence are also examined. This research has immediate policy implications since Armenia will undergo major upward price adjustments for goods and services with regulated prices, which may have a negative impact on income distribution if aggregate demand management is unchanged.http://deepblue.lib.umich.edu/bitstream/2027.42/40117/3/wp731.pd

IMPACT OF REGULATED PRICE ADJUSTMENTS ON PRICE VARIABILITY IN A VERY LOW INFLATION TRANSITION ECONOMY: CASE OF ARMENIA

The impact of macroeconomic management (monetary policy) and administrative price adjustments on price variability in a low inflation economy characterized by relatively frequent administrative price adjustments is examined. Fluctuations of market determined prices, prices of agricultural goods in particular, are linked to the lack of synchronization between administrative price changes and monetary policy. If monetary policy does not account for expected changes in administrative prices, demand in “free” goods markets will shift causing fluctuation of prices for agricultural goods, because the supply of these goods is highly inelastic in Armenia. The findings contribute to a better understanding of agricultural price variability during 1998-2002. The impact of macroeconomic policy and structural adjustments on income distribution and rural poverty incidence are also examined. This research has immediate policy implications since Armenia will undergo major upward price adjustments for goods and services with regulated prices, which may have a negative impact on income distribution if aggregate demand management is unchanged.Inflation, price variability, regulated prices

Impact of regulated price adjustments on price variability in a very low inflation transition economy: Case of Armenia

This paper examines the impact of monetary policy and administrative price adjustments on price variability in a low inflation economy characterized by relatively frequent administrative price adjustments. Fluctuations of market determined prices, prices of agricultural goods in particular, are linked to poor synchronization between administrative price changes and monetary policy. If monetary policy does not account for expected changes in administrative prices, demand for free goods shifts, causing fluctuation of prices for agricultural goods, because the supply of these goods is highly inelastic in Armenia. The findings contribute to a better understanding of agricultural price variability during 1998-2002. The impact of macroeconomic policy and structural adjustments on income distribution and rural poverty incidence are also examined. This research has immediate policy implications, since Armenia will continue to undergo major upward price adjustments of regulated prices, which may have a negative impact on income distribution unless aggregate demand management is changed.Inflation; price variability; regulated prices

Factors behind persistent rural poverty in Armenia

Poverty monitoring through household surveys in the period 1996-2003 did not reveal poverty reduction in rural areas. At the same time poverty reduction in urban areas especially in the capital was significant. This paper attempts to contribute to a better understanding of the factors behind persisting rural poverty in Armenia. Rural poverty in Armenia has been largely stagnant in the context of continuous growth in agriculture as rural farm incomes did not respond to the growing agricultural value-added. Further, negative relative price shocks may have held back agricultural growth significantly below the level of economic growth, thus impeding its potential to reduce rural poverty. Incomes from non-farm employment of rural households failed to increase while the growing state benefits and remittances were insufficient to serve as a safeguard from poverty. We use the data available from household surveys, national statistics as well as expert estimations to examine the factors impeding rural poverty reduction