IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/v100y1992i4p673-90.html
   My bibliography  Save this article

Economic Crisis in a Shortage Economy

Author

Listed:
  • Osband, Kent

Abstract

It is not unusual for reforming socialist economies to relax wage controls without hardening budget constraints on enterprises or freeing consumer goods prices. This policy can be dangerously destabilizing. While higher wages permit workers to purchase more of some goods, they also tend to exacerbate shortages and to breed waste and corruption. Beyond a certain level, economywide wage hikes will worsen worker welfare, regardless of whether deficit goods are strictly rationed, sold randomly at official prices to queuing workers, or offered to workers by "insiders" only at black-market prices. However, the form of allocation does influence the levels of output and welfare. Copyright 1992 by University of Chicago Press.

Suggested Citation

  • Osband, Kent, 1992. "Economic Crisis in a Shortage Economy," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 673-690, August.
    • Handle: RePEc:ucp:jpolec:v:100:y:1992:i:4:p:673-90
    DOI: 10.1086/261835
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/261835
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JPE for details.
    File URL: https://libkey.io/10.1086/261835?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sergei Guriev, 2019. "Gorbachev versus Deng: A Review of Chris Miller's The Struggle to Save the Soviet Economy," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 120-146, March.
    2. Kazimierz Stanczak, 1992. "Price Controls, Inflation, and Welfare in the Steady-State," UCLA Economics Working Papers 684, UCLA Department of Economics.
    3. Berkowitz, Daniel & DeJong, David N., 2002. "Accounting for growth in post-Soviet Russia," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 221-239, March.
    4. repec:spo:wpmain:info:hdl:2441/50oojv2kpq972a1928dqj0v6at is not listed on IDEAS
    5. Bennett, John & Dixon, Huw David, 1995. "Macroeconomic equilibrium and reform in a transitional economy," European Economic Review, Elsevier, vol. 39(8), pages 1465-1485, October.
    6. Sergei Guriev, 2019. "Gorbachev versus Deng: A Review of Chris Miller's The Struggle to Save the Soviet Economy," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 120-146, March.
    7. von Furstenberg, George M & Spangenberg, Nicholas O, 1996. "The Political Temptations of Rationing by Insiders," Public Choice, Springer, vol. 88(1-2), pages 69-81, July.
    8. Alexeev, Michael & Sabyr, Lyaziza, 2004. "Black markets and pre-reform crises in former socialist economies," Economic Systems, Elsevier, vol. 28(1), pages 1-12, March.
    9. Alexeev, Michael & Leitzel, James, 2001. "Income distribution and price controls: Targeting a social safety net during economic transition," European Economic Review, Elsevier, vol. 45(9), pages 1647-1663, October.
    10. Brennan Platt, 2009. "Queue-rationed equilibria with fixed costs of waiting," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 247-274, August.
    11. Reynolds, Douglas B. & Kolodziej, Marek, 2008. "Former Soviet Union oil production and GDP decline: Granger causality and the multi-cycle Hubbert curve," Energy Economics, Elsevier, vol. 30(2), pages 271-289, March.
    12. Robert K. Kaufmann, 2014. "The End of Cheap Oil: Economic, Social, and Political Change in the US and Former Soviet Union," Energies, MDPI, vol. 7(10), pages 1-17, September.
    13. Berkowitz, Daniel, 1996. "On the persistence of rationing following liberalization: A theory for economies in transition," European Economic Review, Elsevier, vol. 40(6), pages 1259-1279, June.
    14. repec:hal:spmain:info:hdl:2441/50oojv2kpq972a1928dqj0v6at is not listed on IDEAS
    15. Kazimierz Stanczak, 1993. "The Benefits of Imperfect Competition Under Price Controls," UCLA Economics Working Papers 692, UCLA Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:100:y:1992:i:4:p:673-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.