The Abnormally Persistent and High Inflation in Ukraine

Why is the Ukraine - one of the more prosperous republics of the former USSR in terms of economic development and population welfare - still suffering of extremely poor economic performances almost five years after the starting of the transition process? High inflation is surely one of the most destructive phenomena threatening the success of the reforms undertaken by the government (9,000% inflation in 1993 !). This paper asserts that the persisting skyrocketing of prices in the Ukraine comes from three major sources, namely: the highly monopolistic market structure, the attractiveness of the US Dollar and the requirements of the International Monetary Fund. Studying such sources conduct to establish that the trend of wages in the public sector is highly correlated with the inflation's trend. With respect to both aims, namely understanding this link between these two variables and outlining possible remedies, this paper calls for the Heymann - Leijonhufvud approach of high inflation phenomena