Title

Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

5-2004

Journal or Book Title

The Review of Economics and Statistics

Volume

86

Issue

2

First Page or Article ID Number

626

Last Page

636

DOI

10.1162/003465304323031166

Abstract

The costs of shortages and rationing are not captured by standard consumer price indices. Thus the change in real GDP per capita is an overestimate of welfare losses in transition economics. In this study virtual prices are used to calculate new cost-of-living indices (CLIs). The results for Polant show that from 1987 to 1992 the CLI ignoring the rationing effects is biased upward from 1.53 to 3.71 percentage points per year. Compared to the estimates of welfare loss that neglect the rationing effects during the prereform period, the estimated welfare losses that reflect the rationing are reduced by 50% using Hausman' virtual prices and by 75% using external proxy virtual prices.

Comments

This is a working paper of an article from The Review of Economics and Statistics 86 (2004): 626, doi: 10.1162/003465304323031166.