Repressed inflation in the Soviet Union: A temporary equilibrium approach |
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Authors: | Roy Gardner Jonathan Strauss |
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Institution: | CEPREMAP and Iowa State University, Ames, IA 50011, USA;College of William and Mary, Williamsburg, VA 23185, USA |
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Abstract: | The Soviet economy is modeled by means of temporary general equilibrium theory. Three temporary equilibrium states are distinguished. In Walrasian equilibrium, all markets clear. Under repressed inflation, there is excess consumer demand for goods marketed by the state, while consumer demand is deficient in the underconsumption regime. The dynamics of these temporary equilibrium states are studied and the dynamic adjustment equations fitted to Soviet data. Simulation of the model offers an explanation for the tendency of the inventories/cash balances ratio to fall since 1965. |
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