DP432 Economic Change in Poland

Author(s): Olivier J Blanchard, Richard Grenville Layard
Publication Date: June 1990
Keyword(s): Economic Change, Poland
JEL(s): 052
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=432

Poland has tackled its economic problems with courage and, thus far, success. Hyperinflation has ceased, the well-chosen exchange rate has held, and wage behaviour has been responsible.A major recession is under way, and it must not become endemic. A big export effort is needed, followed with discretion by some domestic relaxation. Foreign investment could be encouraged by removing all limits to the repatriation of profit. To prevent unemployment persisting even after demand recovers, unemployment benefits could be replaced after one year by paid temporary employment on public works.Inflation still needs to be reduced further to reach West European levels. One obvious approach is to lengthen the period of indexation used in calculating wage ceilings. Finally, privatization should be accelerated, either by giving the capital stock to the people or by selling it in the form of highly-geared holding companies.