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The Inter-Enterprise Debt Explosion in the Former Soviet Union: Causes, Consequences, Cures

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  • J Rostowski

Abstract

The reasons for the growth of inter-enterprise debt analyzed. It is suggested that it results mainly from the appearance of normal trade credit in a liberalized economy, and when a monetary squeeze is part of a non-credible stabilization attempt. In the latter case the results can be a sharp fall in output. Non-market and market solutions to this problem are analyzed, and the advantages of the latter over the former are stressed.

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  • J Rostowski, 1993. "The Inter-Enterprise Debt Explosion in the Former Soviet Union: Causes, Consequences, Cures," CEP Discussion Papers dp0142, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0142
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    References listed on IDEAS

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    1. J Rostowski, 1993. "Creating Stable Monetary Systems in Post-Communist Economies," CEP Discussion Papers dp0141, Centre for Economic Performance, LSE.
    2. David Begg & Richard Portes, 1993. "Enterprise debt and economic transformation (Financial restructuring of the state sector in Central and Eastern Europe)," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(1), pages 116-117, January.
    3. P Auerbach & G Davison, 1992. "Secondary Currencies and High Inflation. Implications for Monetary Theory and Policy," CEP Discussion Papers dp0058, Centre for Economic Performance, LSE.
    4. Eric V. Clifton & Mohsin S. Khan, 1993. "Interenterprise Arrears in Transforming Economies: The Case of Romania," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 680-696, September.
    5. Williamson, J., 1992. "The Eastern transition to a market economy: a global perspective," LSE Research Online Documents on Economics 21055, London School of Economics and Political Science, LSE Library.
    6. Rostowski, J., 1993. "Creating stable monetary systems in post-communist economies," LSE Research Online Documents on Economics 20970, London School of Economics and Political Science, LSE Library.
    7. Calvo, Guillermo A & Coricelli, Fabrizio, 1992. "Stagflationary Effects of Stabilization Programs in Reforming Socialist Countries: Enterprise-Side and Household-Side Factors," The World Bank Economic Review, World Bank, vol. 6(1), pages 71-90, January.
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    Cited by:

    1. Stanislaw Gomulka, 1994. "The financial situation of enterprises and its impact on monetary and fiscal policies, Poland 1992–93," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(2), pages 189-208, June.
    2. Hirvensalo, Inkeri, . "Strategic Adaptation of Enterprises to Turbulent Transitionary Markets. Operative Strategies of Finnish Firms in Russia and the Baltic States during 1991-95," ETLA A, The Research Institute of the Finnish Economy, number 24, June.
    3. Marin, Dalia & Schnitzer, Monika, 2005. "Disorganization and financial collapse," European Economic Review, Elsevier, vol. 49(2), pages 387-408, February.
    4. Gomulka, Stanislaw & Quah, Danny, 1994. "Lessons from economic transformation and the road forward," LSE Research Online Documents on Economics 2027, London School of Economics and Political Science, LSE Library.
    5. Perotti, E. C., 1998. "Inertial credit and opportunistic arrears in transition," European Economic Review, Elsevier, vol. 42(9), pages 1703-1725, November.
    6. Marek Dabrowski & Wojciech Paczynski & Lukasz Rawdanowicz, 2002. "Inflation and Monetary Policy in Russia: Transition Experience and Future Recommendations," CASE Network Studies and Analyses 0241, CASE-Center for Social and Economic Research.
    7. Milan Nikolic & Jacek Rostowski, 1995. "Exit in the Framework of Macro-economic Shocks and Policy Responses during Transition: a Cross-country Comparison," CASE Network Studies and Analyses 0056, CASE-Center for Social and Economic Research.
    8. Wladimir Andreff, 2004. "Would a Second Transition Stage Prolong the Initial Period of Post-socialist Economic Transformation into Market Capitalism?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(1), pages 7-31, June.
    9. Stanislaw Gomulka & Danny Quah, 1994. "Lessons from Economic Transformation and the Road Forward," CEP Occasional Papers 05, Centre for Economic Performance, LSE.
    10. Stanislaw Gomulka, 1994. "Lessons from Economic Transformation and the Road Forward," CASE Network Studies and Analyses 0017, CASE-Center for Social and Economic Research.
    11. Pelinescu, Elena, 2013. "The Mechanisms of Arrears in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 223-239, June.
    12. Stanislaw Gomulka, 1993. "The Financial Situation of Polish Enterprises 1992-93 and its Impact on Monetary and Fiscal Policies," CASE Network Studies and Analyses 0006, CASE-Center for Social and Economic Research.
    13. Dinko Dubravčcić, 1995. "Entrepreneurial aspects of privatisation in transition economies," Europe-Asia Studies, Taylor & Francis Journals, vol. 47(2), pages 305-316.
    14. J Rostowski, 1993. "Creating Stable Monetary Systems in Post-Communist Economies," CEP Discussion Papers dp0141, Centre for Economic Performance, LSE.
    15. Rostowski, J., 1993. "Creating stable monetary systems in post-communist economies," LSE Research Online Documents on Economics 20970, London School of Economics and Political Science, LSE Library.
    16. Scholtens, Bert, 2000. "Financial regulation and financial system architecture in Central Europe," Journal of Banking & Finance, Elsevier, vol. 24(4), pages 525-553, April.

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