Wage and Price Control Policies in Socialist Transitional Economies Report as inadecuate




Wage and Price Control Policies in Socialist Transitional Economies - Download this document for free, or read online. Document in PDF available to download.

This paper studies the structural impact of wage and price control policies in socialist transitional economies using a two-sector three-factor small open economy model. It illustrates the results quantitatively via simulation exercises. At the earlier stage of the transition when labor is immobile, a strict control on the price of the non-tradables and the wage rate minimizes the fall in employment and output. Also, a more severe control on the price of the non-tradables than on the wage rate alleviates the fall in the real wage at negligible costs in lost employment and output. At the later stage of the transition when labor becomes mobile, the liberalization of the price of the nontradables can proceed faster than that of the wage rate. This policy combination increases employment and output and reduces the shortage for the non-tradables, but lowers the real wage.

Keywords: liberalization ; structural adjustment ; price policy ; wage policy ; socialist transitional economies

Subject(s): Labor and Human Capital

Issue Date: 1996

Publication Type: Working or Discussion Paper

PURL Identifier: http://purl.umn.edu/28515

Total Pages: 39

Series Statement: Center Discussion Paper No. 761

Record appears in: Yale University > Economic Growth Center > Center Discussion Papers





Author: Fardmanesh, Mohsen ; Tan, Li

Source: http://ageconsearch.umn.edu/record/28515?ln=en







Related documents