Book contents
- Frontmatter
- Contents
- List of Contributors
- Preface
- Introduction Stabilization After Five Years of Reform: Issues and Experiences
- PART I GENERAL STUDIES
- PART II COUNTRY STUDIES
- 5 Inflation and Stabilization in Poland, 1990–95
- 6 The Political Economy of the Hungarian Stabilization and Austerity Program
- 7 Preparation and Implementation of a Credible Stabilization Program in the Republic of Croatia
- 8 Exchange Rate and Prices in a Stabilization Program: The Case of Croatia
- 9 Stabilization in Slovenia: From High Inflation to Excessive Inflow of Foreign Capital
- 10 Macroeconomic Stabilization in the Baltic States
- 11 Economic Reform in Ukraine
- PART III AFTERWORD
- Index
5 - Inflation and Stabilization in Poland, 1990–95
Published online by Cambridge University Press: 09 October 2009
- Frontmatter
- Contents
- List of Contributors
- Preface
- Introduction Stabilization After Five Years of Reform: Issues and Experiences
- PART I GENERAL STUDIES
- PART II COUNTRY STUDIES
- 5 Inflation and Stabilization in Poland, 1990–95
- 6 The Political Economy of the Hungarian Stabilization and Austerity Program
- 7 Preparation and Implementation of a Credible Stabilization Program in the Republic of Croatia
- 8 Exchange Rate and Prices in a Stabilization Program: The Case of Croatia
- 9 Stabilization in Slovenia: From High Inflation to Excessive Inflow of Foreign Capital
- 10 Macroeconomic Stabilization in the Baltic States
- 11 Economic Reform in Ukraine
- PART III AFTERWORD
- Index
Summary
The Polish liberalization and stabilization program that was put into effect on January 1, 1990, called for the removal of virtually all price controls and for a sharp curtailment of production subsidies. These measures magnified the effects of pre-existing inflationary forces. Within one month, the retail price index rose by 79.6%. The inflation was, however, quickly brought under control by the stabilization measures adopted as a part of the reform package. By August, the rate of price increase declined to 1.8% per month. Yet the goal of complete price stability by year's end proved to be elusive. In 1991, prices still rose by over 70%; inflation slowed down in subsequent years but remained at a two-digit level (Table 1).
To throw light on the causes of the persistence of inflation, let us briefly examine Poland's post-1990 monetary and exchange-rate policy. The history of Polish stabilization may be divided into three distinct periods: the fixed–exchange-rate period (1 January 1990 – 17 May 1991), which was followed by the periodic adjustment period (which lasted until 27 August 1993) and the crawling peg period.
INFLATION IN THE FIXED–EXCHANGE-RATE PERIOD
The Solidarity-led regime that was formed in autumn of 1989 inherited a partially liberalized and half-dismantled command system, and an economy hovering on the verge of hyperinflation. During the last quarter of the year, the new government took measures to limit the rate of expansion of net domestic assets, and also to reduce the gap between the official exchange rate of the zloty and the free-market rate.
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- Macroeconomic Stabilization in Transition Economies , pp. 157 - 171Publisher: Cambridge University PressPrint publication year: 1997
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