Publication at Faculty of Social Sciences, Faculty of Mathematics and Physics, Centre for Economic Research and Graduate Education, Central Library of Charles University |
2011
Abstract
The necessity to obtain accurate price measurements is particularly important in transition economies that need to restrain government revenues (and therefore tax rates) in order to promote economic growth at a time when political realities dictate large social programs, often indexed to inflation, to mitigate the effects of the transition. Upwardly biased measures of inflation that overstate apparent income declines during the transition will have clear domestic political consequences, reducing public support of necessary reforms and increasing political instability.