ABSTRACT
The process of revolutionary changes in Central and Eastern Europe started in 1989 in an aura of popular enthusiasm and optimism. In all countries in transitions (CIT), the stabilization-cum-reform programs failed to meet the macroeconomic targets set by governments or specified in agreements with the International Monetary Fund. Statistical evidence suggests that in most cases the first phase of stabilization was moderately successful on the financial side, but rather disappointing on the real side. Possible explanations of the excessive recession in CITs cover a large range of exogenous and endogenous factors. The initial devaluation, intended to anticipate the corrective inflation following price liberalization, turned out to be excessive because the excess liquidity in the hands of households had been significantly overestimated. The Polish experiment may be particularly instructive in this respect because it started earlier than the others, so that the impact of economic policy can be examined over a longer period.
