The macroeconomic consequences of anticipated price reform

John Fender, Derek Laing

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

This paper uses a two-period model to examine the macroeconomic consequences of anticipated price liberalization. In the first period prices are controlled, there is excess demand for goods and consumers must engage in costly queuing to make purchases. In the second period prices are freed, eliminating the need for queues. We establish the possibility of multiple Pareto-rankable equilibria and examine the effects of contingent policy rules. The framework enables us to examine a number of issues of importance, such as the problem of the monetary overhang, the relevance of budgetary policies and the effects of foreign aid.

Original languageEnglish (US)
Pages (from-to)311-331
Number of pages21
JournalEconomics and Politics
Volume10
Issue number3
DOIs
StatePublished - Jan 1 1998
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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