Sustained inflation in response to price liberalization

The author demonstrates that sustained inflation is a predictable response to price liberalization in the countries of the former Soviet Union. The author models the phenomenon in a dynamic macroeconomic framework,and demonstrates the immediate price jump followed by sustained inflation that has characterized the transitional economies of the former Soviet Union. The author supports the theoretical derivation with a simulation exercise that demonstrates the scope of sustained inflation for specific parameters.Markets and Market Access,Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Access to Markets