Disinflation, Monetary Policy and Fiscal Constraints. Experience of the Countries in Transition

Most economies of Central and Eastern Europe (CEE) and the former Soviet Union (FSU) experienced a very high inflation or even hyperinflation in the onset of the transition process. Despite the package of institutional, regulatory and structural reforms that made Poland a leader of economic transition among post-communist countries, the disinflation process in the country was not fast and presented a lot of signs of inflationary inertia. This paper attempts to answer why the pace of disinflation in Poland, considered as evident reform leader in the all region has been much slower than in some other countries, who were considered sometimes less advanced in transition process. To answer this question, the study presents a comparative cross-countries analysis of disinflationary process in post-communist countries. The study covers the period of 1990-1997 with more focus on 1993-1997. The choice for timeframe is grounded on availability of statistics and capability of the post-communist countries to run fully independent monetary policy.