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The nature of the inflation in Poland in the 1990's is an interesting comparison to the hyperinflation which occurred in Russia during the same period.
| Money Aggregates and GDP in Poland at the End of Years, 1983-2004 (millions of zlotys) |
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|---|---|---|---|---|
| Year | Money Supply | Quasi- Money | Money+ Quasi-Money |
GDP (Production based) |
| (Millions of zlotys per year) | ||||
| 1983 | 165 | 129 | 294 | 692 |
| 1984 | 190 | 158 | 348 | 858 |
| 1985 | 229 | 192 | 421 | 1045 |
| 1986 | 279 | 253 | 533 | 1295 |
| 1987 | 352 | 363 | 715 | 1694 |
| 1988 | 532 | 636 | 1168 | 2963 |
| 1989 | 1881 | 5446 | 7327 | 11832 |
| 1990 | 9426 | 9633 | 19060 | 56027 |
| 1991 | 10783 | 15319 | 26,102 | 80,883 |
| 1992 | 14,963 | 26,145 | 41,108 | 114,944 |
| 1993 | 19,646 | 36,278 | 55,924 | 155,780 |
| 1994 | 27,450 | 49,852 | 77,302 | 210,407 |
| 1995 | 37,439 | 66,913 | 104,352 | 286,026 |
| 1996 | 52,331 | 84,186 | 136,517 | 362,814 |
| 1997 | 65,311 | 111,113 | 176,423 | 444,086 |
| 1998 | 71,670 | 149,110 | 220,780 | 589,361 |
| 1999 | 88,201 | 175,307 | 263,508 | 652,517 |
| 2000 | 82,574 | 211,930 | 294,505 | 723,886 |
| 2001 | 94,158 | 244,647 | 338,805 | 760,595 |
| 2002 | 112,889 | 216,527 | 329,416 | 781,112 |
| 2003 | 133,576 | 214,608 | 348,183 | 814,922 |
| 2004 | 146,098 | 226,134 | 142,364 | 883,656 |
The determination of the price level in countries in which there are price controls and rationing requires caution. If consumers cannot buy as much as they want at the control and supplement their official ration with purchases on black markets then the black market price is the true market price and should be used in establishing price levels. When price controls are removed the market price is higher than the control price but it is less than what the black market price was. Thus in the removal of price controls the true market price decreases but the general public thinks that the market price was the control price and hence considers the new market price as a price increase. For more on this topic see Market Prices
The International Monetary Fund financial statistics on price levels in Poland are:
| Index Numbers, 1983-1997 (1990=100) |
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|---|---|---|---|
| Year | Producers' Prices | Consumers' Prices | Wages |
| 1983 | 1.4 | 1.5 | 1.5 |
| 1984 | 1.6 | 1.7 | 1.7 |
| 1985 | 1.9 | 1.9 | 2.0 |
| 1986 | 2.2 | 2.2 | 2.5 |
| 1987 | 2.8 | 2.8 | 3.0 |
| 1988 | 4.4 | 4.4 | 5.6 |
| 1989 | 14.1 | 15.3 | 21.5 |
| 1990 | 100.0 | 100.0 | 100.0 |
| 1991 | 150.3 | 176.7 | 167.1 |
| 1992 | 192.0 | 256.8 | 228.5 |
| 1993 | 253.9 | 351.5 | 320.0 |
| 1994 | 330.3 | 468.4 | 421.4 |
| 1995 | 414.7 | 593.9 | 595.9 |
| 1996 | 469.4 | 713.5 | 752.7 |
| 1997 | NA | 827.1 | 903.4 |
| Index Numbers, 1998-2004 (2000=100) |
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|---|---|---|---|
| Year | Producers' Prices | Consumers' Prices | Wages |
| 1998 | 88.0 | 84.7 | 83.1 |
| 1999 | 92.8 | 90.9 | 90.6 |
| 2000 | 100.0 | 100.0 | 100.0 |
| 2001 | 101.7 | 105.5 | 106.9 |
| 2002 | 102.8 | 107.5 | 111.0 |
| 2003 | 105.6 | 108.3 | 114.2 |
| 2004 | 113.0 | 112.2 | 119.8 |
| 2005 |
| Index Numbers, 1983-1997 (1990=100) |
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|---|---|---|---|
| Year | Producers' Prices | Consumers' Prices | Wages |
| 1983 | 1.4 | 1.5 | 1.5 |
| 1984 | 1.6 | 1.7 | 1.7 |
| 1985 | 1.9 | 1.9 | 2.0 |
| 1986 | 2.2 | 2.2 | 2.5 |
| 1987 | 2.8 | 2.8 | 3.0 |
| 1988 | 4.4 | 4.4 | 5.6 |
| 1989 | 14.1 | 15.3 | 21.5 |
| 1990 | 100.0 | 100.0 | 100.0 |
| 1991 | 150.3 | 176.7 | 167.1 |
| 1992 | 192.0 | 256.8 | 228.5 |
| 1993 | 253.9 | 351.5 | 320.0 |
| 1994 | 330.3 | 468.4 | 421.4 |
| 1995 | 414.7 | 593.9 | 595.9 |
| 1996 | 469.4 | 713.5 | 752.7 |
| 1997 | NA | 827.1 | 903.4 |
The rates of inflation for the period were:
| Rates of Inflation , 1998-2004 (2000=100) |
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|---|---|---|---|
| Year | Producers' Prices | Consumers' Prices | Wages |
| 1983 | 14.3% | 13.3% | 13.3% |
| 1984 | 18.8% | 11.8% | 17.7% |
| 1985 | 15.8% | 15.8% | 12.5% |
| 1986 | 27.3% | 27.3% | 20.0% |
| 1987 | 57.1% | 57.1% | 86.7% |
| 1988 | 220.5% | 247.7% | 283.9% |
| 1989 | 609.2% | 553.6% | 365.1% |
| 1990 | 50.3% | 76.7% | 67.1% |
| 1991 | 27.7% | 45.3% | 36.7% |
| 1992 | 32.2% | 36.9% | 40.0% |
| 1993 | 30.1% | 33.3% | 31.7% |
| 1994 | 25.6% | 26.8% | 41.4% |
| 1995 | 13.2% | 20.1% | 26.3% |
| 1996 | NA | 15.9% | 20.0% |
| 1997 | NA | NA | NA |
| 1998 | 5.5% | 7.3% | 9.0% |
| 1999 | 7.8% | 10.0% | 10.4% |
| 2000 | 1.7% | 5.5% | 6.9% |
| 2001 | 1.1% | 1.9% | 3.8% |
| 2002 | 2.7% | 0.7% | 2.9% |
| 2003 | 7.0% | 3.6% | 4.9% |
The Quantity Theory of Money explains the level of prices P in terms of the money supply M, the level of real output Q and the velocity V of money. The Equation of Exchange implies that
The velocity of money would be determined by such factors as the rate of inflation and the real interest rate. The velocities of money for Poland over the period 1993 to 2005 indicate a relative stability in this variable.
| Income Velocities of Money, 1993-2005 (times per year) |
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|---|---|---|
| Year | GDP/M | |
| 1993 | 7.20 | |
| 1994 | 8.91 | |
| 1995 | 10.49 | |
| 1996 | 11.43 | |
| 1997 | 9.62 | |
| 1998 | 7.64 | |
| 1999 | 9.14 | |
| 2000 | 8.30 | |
| 2001 | 7.49 | |
| 2002 | 7.23 | |
| 2003 | 6.07 | |
| 2004 | 5.96 | |
| 2005 | 5.60 |
(To be continued.)
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