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On the Role of Wages in the Ukrainian Transition Process: An Empirical Investi¬gation

Author

Listed:
  • Fazio, Gioacchino

    (Facoltà di Scienze della Formazione -Università di Palermo)

  • Hueber, Oliver

    (Faculté de Droit, des Sciences Économiques et de Gestion (Faculty of Law, Economics and Management) Université de Nice-Sophia Antipolis)

Abstract

This paper looks for answers to the following questions: Why did one of the most prosperous republics of the former USSR suffer from both persistent and high inflation during the first four years of its young existence? Flow could the Ukrainians efficiently put an end to the skyrocketing of prices in the early months of 1996? With the support of a cointegration test, we show that between January 1992 and November 1995 Ukraine was faced with a complex monetary regime in which wages were the economic variable through which most of the inflationary pressures were transmitted, either directly or indirectly. Since the beginning of 1996, the new monetary regime reduced inflation but wage and pension arrears have quickly increased. We outline possible remedies for this situation that is not sustainable in the long term.

Suggested Citation

  • Fazio, Gioacchino & Hueber, Oliver, 1998. "On the Role of Wages in the Ukrainian Transition Process: An Empirical Investi¬gation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 51(4), pages 517-529.
    • Handle: RePEc:ris:ecoint:0290
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    References listed on IDEAS

    as
    1. Halushka, Andrij & Savluk, Sergei & Wörgötter, Andreas, 1994. "Ukrainian Hyperinflation: History, Analysis, Recommendations," East European Series 10, Institute for Advanced Studies.
    2. Cukierman Alex, 1992. "CENTRAL BANK STRATEGY, CREDIBILITY, AND INDEPENDANCE: THEORY AND EVIDENCE: Compte Rendu par Dominique Cariofillo," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 581-590, December.
    3. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    5. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, April.
    6. Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-555, June.
    7. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Paper 1227, Economics Department, Queen's University.
    8. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-1056, September.
    9. Olivier Hueber, 1995. "The Abnormally Persistent and High Inflation in Ukraine," Post-Print hal-00819121, HAL.
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    More about this item

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General

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