We construct a simple two period model of an economy in transition from being centrally planned to being market oriented. Using this model, we draw certain positive conclusions about economic policies that reduce distortions during the transition period. In particular, we focus on the role of...

This study develops a dynamic general equilibrium model, applied to Pakistani data, in which optimizing agents evade taxes by operating in the underground economy. The cost to firms of evading taxes is that they find themselves subject to credit rationing from banks. Our model simulations show...

The results strongly support the hypothesis of repressed inflation. The annual rate of inflation of the "true" price index is approximately 12.4 percent higher than that of the official price index over the 10-year period. (DSE)