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World Economic Survey 1957

image of World Economic Survey 1957

World Economic Survey 1957 examines the problem of inflation, analysing its nature as well as recent governmental anti-inflationary policies, with particular emphasis on the role of monetary policies. Both demand and cost elements, as well as the significance of monetary factors are reviewed. The Survey also highlights recent events in the world economy, paying special attention to the factors underlying the recessionary trends that emerged in 1957, and provides an economic outlook for 1958.

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Inflation in centrally planned economies

Despite State ownership of most productive capacity and State planning of resource allocation, the centrally planned economies have all experienced considerable inflationary pressure during certain periods of their history. It is of interest to consider how such pressure can develop in a planned economy, where concentration of economic power in the central authorities would seem to have eliminated any obstacle to continual adjustment of demand to the level of supply. If all goods and services were subject to direct distribution by government agencies, no problem of imbalance between demand and supply could arise, although major shifts in the allocation of national product from consumption to accumulation might still create social tensions. The problem of balance between demand and supply in the centrally planned economies is created by the fact that, as a rule, consumer goods and labour are not directly allocated but exchanged, that is, incomes are paid in money and used for purchases of goods. These payments take the form of money flows which may generate inflationary pressure if they are not in line with the flows of consumer goods and services available for sale.

English

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