DP91 The Theory and Measurement of Macroeconomic Disequilibrium in Centrally Planned Economies

Author(s): Richard Portes
Publication Date: January 1986
Keyword(s): Centrally Planned Economies, Disequilibrium, Planners' Behaviour, Rationing and Shortages, Repressed Inflation
JEL(s): 023, 027, 052
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=91

The paper considers issues in recent research on macroeconomic equilibrium in centrally planned economies. I defend the explicit aggregative, macroeconomic approach in theory, institutional relationships and measurement. It has offered a fresh, coherent framework for the analysis of many Centrally Planned Economies phenomena, opened up a range of possibilities for empirical investigation, and generated several important spinoffs: work on planners' behaviour; insights into CPE policy problems of the 1970s and early 1980s, which centred on macroeconomic equilibrium and threats to it; and some developments in market economy macro theory and econometrics. The quantity-rationing macro model and disequilibrium econometrics give a more useful as well as a more nuanced view of macroeconomic reality in CPEs than the conventional wisdom characterizing them as perpetual "shortage economies".