Inflation in Estonia : The effect of transition
Sepp, Urmas (19.04.1995)
Bank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201408113069
This paper treats inflation in Estonia during a period of dramatic change.In the course of this period both the nature and features of inflation have changed considerably. Starting in the mid-1980s, the development of the Estonian economy can be divided into two periods. During the first period the command economy was transformed into a postsocialist economy.The latter period was marked by the abolition of centralization and direct control, which are typical of the command economy. The difference between these periods is most clearly seen on the microeconomic level and is connected with the importance of market signals in determining the behaviour of economic agents. During the first period, i.e. from 1985 to 1992, nonmarket forces determined this behaviour.The market, or at least the initial conditions for a market were functioning, but market signals were not for the most part taken into account.In reality the command economy was reformed without a qualitative change in the economic system. The second period, which began in 1992 in connection with the monetary reform, include the qualitative change from a command economy to a market economy.The reforms that have taken place during the second period are making market signals the main impetus for the economic agents' behaviour. The nature of inflation has been different in the two periods. In the period of the post-socialist economy, inflation was a phenomenon that accompanied the liberalization of a command economy.
Uudelleenjulkaistu pdf-muodossa 2002 (Idäntalouksien yksikön sarja)Reprint in PDF format 2002 (Unit for Eastern European Economies series)