Ending high inflation : the case of Russia versus Poland and the CSFR

Abstract

This dissertation analyses the efficacy of stabilisation policies in the early period of transition to the market, marshalling evidence from the experience of three countries - the Russian Federation, Poland and the Czech and Slovak Federal Republic (CSFR). The Russian experience is the central focus, whilst evidence drawn from Poland and the former CSFR allows more rigorous testing of the central analytical conclusions. What can such a study add to the arsenal of economics? The nature of the Russian inflation and stabilisation remains a theoretically and empirically disputed question, with critical policy implications. Thus the systematic, analytically-based account of this, underpinned by econometric evidence, could be considered a contribution on its own. Clearly this account is also one more opportunity for empirical examination of fundamental theories on the nature of inflation and the impact of alternate stabilisation measures, still much disputed in the literature. A key conclusion of this part of the work has been that inflation in Russia was mainly a monetary phenomenon, and that the expansion of the money supply has been driven by the size of quasi-fiscal expenditures and the way they were financed. The reader will find standard modelling of the Russian case.