Re-evaluation of Welfare Changes during the Transition in Poland
Economics, Center for Agricultural and Rural Development
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The costs of shortages/rationing are not captured by standard consumer price indices. Thus the change in real GDP per capita is an over-estimate of welfare losses in transition economies. In this study virtual prices are used to calculate new cost of living indices, making it possible to construct more accurate pre-reform and post-reform welfare comparisons. The results for Poland using virtual prices show 62-84% decline in welfare over the transition 1987-92. This welfare loss is approximately one-third of the value obtained using actual prices.
Huffman, Sonya K. and Johnson, Stanley R., "Re-evaluation of Welfare Changes during the Transition in Poland" (2002). Economics Publications. 201.