The Theory and Measurement of Macroeconomic Disequilibrium in Centrally Planned Economies

45 Pages Posted: 16 Jul 2004 Last revised: 18 Aug 2010

See all articles by Richard Portes

Richard Portes

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: March 1986

Abstract

The paper considers issues in recent research on macroeconomic equilibrium in centrally planned economies. I defend the explicit aggregative , macroeconomic approach in theory, institutional relationships and measurement. It has offered a fresh, coherent framework for analysis of many CPE phenomena, opened up a range of possibilities for empirical investigation, and generated several important spinoffs: work of planners' behavior, insights into CPE policy problems of the 1970s and early 1980s, which centred on macroeconomic equilibrium and threats to it; and some developments in market economy macro theory and econometrics. The quantity-rationing macro model and disequilibrium econometrics give a more useful as well as a more nuanced view of macroeconomic reality in CPEs than the conventional wisdom characterizing them as perpetual "shortage economies".

Suggested Citation

Portes, Richard, The Theory and Measurement of Macroeconomic Disequilibrium in Centrally Planned Economies (March 1986). NBER Working Paper No. w1875, Available at SSRN: https://ssrn.com/abstract=227159

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