ABSTRACT
In 1994, Hungary, Poland, and the Czech Republic may emerge from this period of decline. Economic conditions should at least level off, and there may even be some weak growth. Comparing the stated macroeconomic goals of the stabilization plans with the actual results reveals a systematic pattern: Production fell more and longer, unemployment grew more rapidly, inflation was higher, and the budget deficit was larger than anticipated. The contraction of demand thus had two causes. The first, and relatively unexpected, was the dislocations in trade relations among the socialist countries. The other was found in the stabilization plans precisely designed to reduce excessive demand. The free market approach assumed a speedy systemic change whereby the abolition of the economic institutions and the system as a whole that had been inherited from the socialist period would permit the self-regulating order of the market to develop quickly and spontaneously.
