chapter  9
CONSUMER PRICE REFORMS AND THE SAFETY NET IN TRANSITION ECONOMIES
ByEhtisham Ahmad, Liam Halligan
Pages 15

The reform of administered consumer prices in the formerly centrally planned economies is a key to the successful transition to a market-based system. The sequencing of consumer price adjustment has implications for the effective use of market signals to guide production decisions, particularly though not exclusively in agricultural activities. However, the transition may falter if effective measures are not put in place to ‘protect’ the most vulnerable groups of the population. Vito Tanzi (1992) has stressed the importance of assessing the applicability of policies in relation to institutional constraints. ‘Apparent’ first-best options may fail if such constraints are not explicitly considered.