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Empirical Tests of Impacts of Rationing: The Case of Poland in Transition

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  • Sonya Kostova Huffman
  • Stanley R. Johnson

Abstract

This study tests the theory of rationing, examining changes in household consumption behavior during the transition to a market economy in Poland, 1987-92. Using pre-reform data from the Polish Household Budget Survey, Huffman and Johnson develop a model of consumption under rationing and derive virtual prices for food and housing. A pre-reform Almost Ideal Demand System (AIDS) model with rationing is then used to estimate plausible values for price and income elasticities. Comparing pre-reform and post-reform (without rationing) AIDS models shows that own-price elasticities for nonrational goods are larger after the reform, and there is increased complementarity and decreased substitutability for nonrationed goods. This comparison also shows a 75 percent decline in real household welfare over the transition to a market economy.

Suggested Citation

  • Sonya Kostova Huffman & Stanley R. Johnson, 2000. "Empirical Tests of Impacts of Rationing: The Case of Poland in Transition," Center for Agricultural and Rural Development (CARD) Publications 00-wp237, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:00-wp237
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    Cited by:

    1. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Economics Series Working Papers Number 136, University of Oxford, Department of Economics.
    2. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Oxford Economic and Social History Working Papers _136, University of Oxford, Department of Economics.

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