The Second Economy and the Destabilizing Effect of Its Growth on the State Economy in the Soviet Union, 1965-1989
Vladimir G. Treml
Indiana University Bloomington - Department of Economics
Duke Economics Working Paper #95-33
The authors suggest that the rapid growth of the illegal underground economy in 1970s and 1980s has destabilized the Soviet state economy and weakened the mechanism of central planning. This hypothesis is advanced on the basis of the examination of striking decline in income (legal) elasticities of demand for a number of consumer goods purchased in state retail trade in Russia and Ukraine. The growth of income from illegal sources and purchases of consumer goods in black markets explains this phenomenon.
Number of Pages in PDF File: 90
JEL Classification: P21, P27, P39working papers series
Date posted: April 27, 1997
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