The Effect of Incomes Policies on Inflation in Bulgaria and Poland |
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Authors: | Tihomir Enev and Kenneth Koford |
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Institution: | (1) Department of Economics, University of Delaware, Newark, DE, 19716, U.S.A. |
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Abstract: | Transition countries, and many other countries with incomplete markets, have faced long periods with both high inflation and
unemployment. Policies to reduce inflation without high unemployment include incomes policies, which were widely employed
in transition countries. This paper studies the effects of incomes policies on inflation in Bulgaria and Poland in 1990-1993.
The actual policies, which were complex and changing, are examined. The policies do not appear well-designed in a technical
sense to reduce inflation.
A time-series analysis is made which includes standard determinants of inflation including past inflation, wage increases,
exchange rate changes, and monetary changes, plus a dummy for incomes policies. The regressions are fairly successful in fitting
standard factors that should influence inflation, particularly the exchange rate and unemployment in Bulgaria and wages and
unemployment in Poland. They find a fairly substantial inflation-reducing effect from the Bulgarian policy but no significant
results from the Polish policy.
This revised version was published online in July 2006 with corrections to the Cover Date. |
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Keywords: | incomes policies transition Bulgaria Poland |
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