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Causes of repressed inflation in the Soviet consumer market, 1965–1989: retail price subsidies, the siphoning effect, and the budget deficit[Note 1. I thank Antoni Chawluk, Christopher Davis, Tim Hatton, Michael ...]
Author(s) -
Kim ByungYeon
Publication year - 2002
Publication title -
the economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.014
H-Index - 49
eISSN - 1468-0289
pISSN - 0013-0117
DOI - 10.1111/1468-0289.00216
Subject(s) - purchasing power , subsidy , deficit spending , inflation (cosmology) , economics , disequilibrium , monetary economics , purchasing , market economy , commerce , macroeconomics , debt , physics , theoretical physics , medicine , operations management , ophthalmology
This article uses material which has recently been made available from Russian archives to analyse the causes of repressed inflation in the Soviet consumer market. It finds that retail price subsidies, which increased as a proportion of state budget expenditure from 4 per cent in 1965 to 20 per cent in the late 1980s, intensified consumer market disequilibrium. The provision of these subsidies had negative effects on the market by maintaining the purchasing power of households for consumer goods and by increasing the budget deficit. The unauthorized purchase of consumer goods by enterprises tended to increase during these years also.