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The Macroeconomic Consequences of Anticipated Price Reform

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  • J. Fender
  • D. Laing

Abstract

This paper uses a two‐period model to examine the macroeconomic consequences of anticipated price liberalization. In the first period prices are controlled, there is excess demand for goods and consumers must engage in costly queuing to make purchases. In the second period prices are freed, eliminating the need for queues. We establish the possibility of multiple Pareto‐rankable equilibria and examine the effects of contingent policy rules. The framework enables us to examine a number of issues of importance, such as the problem of the monetary overhang, the relevance of budgetary policies and the effects of foreign aid.

Suggested Citation

  • J. Fender & D. Laing, 1998. "The Macroeconomic Consequences of Anticipated Price Reform," Economics and Politics, Wiley Blackwell, vol. 10(3), pages 311-331, November.
    • Handle: RePEc:bla:ecopol:v:10:y:1998:i:3:p:311-331
    DOI: 10.1111/1468-0343.00048
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    Cited by:

    1. Fender, John, 1999. "A general equilibrium model of crime and punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 437-453, July.

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