Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates / Dani Rodrik.

Format:

Book

Author/Creator:

Rodrik, Dani.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4112.

NBER working paper series no. w4112

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Making Sense of the Soviet Trade Shock in Eastern Europe

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

Eastern European countries have experienced sharp declines in real GDP since 1990. One of the reasons for this decline is the Soviet trade shock, deriving from the collapse of the CMEA and of traditional export markets in the Soviet Union. This paper is an attempt to quantify the magnitude of this external shock. A conceptual framework is developed to show that the shock has three distinct elements: (a) a terms of trade deterioration; (b) a market-loss effect; and (c) a removal-of-import-subsidy effect. Taking all three together, and also adding in Keynesian multiplier effects, the conclusion is that the Soviet trade shock accounts for all of the decline in Hungarian GDP, about 60 percent of decline in Czechoslovakia, and between a quarter and a third of the decline in Poland.

Notes:

Print version record

June 1992.