IMF Working Papers

Fiscal Policy During the Demise of Central Planning: The Transition to a Market Economy

By Andrew Feltenstein

October 1, 1990

Preview Citation

Format: Chicago

Andrew Feltenstein. Fiscal Policy During the Demise of Central Planning: The Transition to a Market Economy, (USA: International Monetary Fund, 1990) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper constructs an intertemporal general equilibrium model designed to examine an economy in transition from central planning to being market oriented. A numerical algorithm is developed to obtain a solution for the model. Simulations using stylized country-specific data examine the effects of price controls during the transition period, as well as of imposing taxes on returns to investment, and on interest earned on private savings. The paper concludes that, under certain circumstances, the taxation of investment as well as of private savings may have positive effects upon consumer welfare, if price distortions are sufficiently severe.

Subject: Consumption, Financial institutions, Fiscal policy, Labor, National accounts, Price controls, Prices, Stocks

Keywords: Capital stock, Choice variable, Consumer demand, Consumption, Decreasing returns to scale, Excess supply, Firm g, Maximization problem, Output price, Price controls, Price level, Stocks, WP

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1990/092

  • Stock No:

    WPIEA0921990

  • ISBN:

    9781451951417

  • ISSN:

    1018-5941

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