INFLATION AND TRANSFORMATIONAL RECESSION - THE EXAMPLE OF STABILIZATION PROGRAMS IN POLAND AND HUNGARY

During the initial phases of the economic transition, all of the forme rly centrally planned economies have carried out adjustment programs a dvocated by the IMF. Directly based on the business cycle hypothesis, the models used have had two main aims : to lower the initially high i nflation rate and then lay the foundations for stable growth in the mi ddle run. About six years after the adoption of these programs, libera l economists tend to consider Poland and Hungary to be ''stabilized''. But many problems persist. In particular, inflation has not stopped; and economic growth is shaky. Beyond the debate about exogenous shocks , the reliability of statistical indicators of economic growth, and th e impossibility of applying alternative strategies, the major problem has to do with the absence of an initial diagnosis of behaviors at the microeconomic level. Such a diagnosis was assumed to be superfluous s ince the market, once introduced, would modify behaviors and make libe ral precepts work. Given that the structures inherited from the Commun ist system were but partly abolished, the emergence of market-oriented behavior has set off complex processes that the business cycle theory did not foresee and cannot easily explain.