Causes of repressed inflation in the Soviet consumer market
Posted on Wednesday, November 9, 2011
Category: Economics Papers
Making use of recently available Soviet material, this report studies the reasons for repressed inflation in the Soviet consumer market during 1965-1989. We discovered that retail price subsidies, which rose from 4% of state budget expenditure in 1965 to 20% in the late 1980s, increased consumer market disequilibrium…
The provision of these subsidies had adverse effects on the market by maintaining the purchasing power of families for consumer goods and also by boosting the budget deficit. Furthermore, the demand of enterprises for consumer goods without genuine permission tended to grow during 1965-1989…
Source: Bank of Finland, Institute for Economies in Transition
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Causes of repressed inflation in the Soviet consumer market