Working Paper: CEPR ID: DP91
Authors: Richard Portes
Abstract: The paper considers issues in recent research on macroeconomic equilibrium in centrally planned economies. I defend the explicit aggregative, macroeconomic approach in theory, institutional relationships and measurement. It has offered a fresh, coherent framework for the analysis of many Centrally Planned Economies phenomena, opened up a range of possibilities for empirical investigation, and generated several important spinoffs: work on planners' behaviour; insights into CPE policy problems of the 1970s and early 1980s, which centred on macroeconomic equilibrium and threats to it; and some developments in market economy macro theory and econometrics. The quantity-rationing macro model and disequilibrium econometrics give a more useful as well as a more nuanced view of macroeconomic reality in CPEs than the conventional wisdom characterizing them as perpetual "shortage economies".
Keywords: centrally planned economies; disequilibrium; rationing; shortages; repressed inflation; planners' behaviour
JEL Codes: 023; 052; 027
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| excess demand for consumption goods (D12) | repressed inflation (E31) |
| repressed inflation (E31) | forced saving (D14) |
| excess demand for consumption goods (D12) | forced saving (D14) |
| excess demand in consumption goods markets (D12) | labor supply (J20) |
| excess demand in consumption goods markets (D12) | output (C67) |