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Soviet Monetary Policy and Government Debts

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Abstract

Soviet thinking on money presupposed that material planning guaranteed rational behavior of the enterprises. This resulted in ignorance of control over non-cash money supply, which assumed to be subject to material planning. Because the presupposition did not hold, funds were utilized inefficiently. Inefficient use of funds made it difficult for the government to continue to borrow and led to the abolition of the subscription sales of government bonds. However, the abolition was not a method to increase the utilization efficiency of funds, and thus, the government needed to secretly borrow to compensate for the inefficient use of funds after the abolition. Consequently, government debts continued to increase. The empirical analysis confirmed that stagnating economic growth accompanied increasing money supply. The result supports the hypothesis that the Soviet economy was unsustainable because of the lack of management mechanism of fiat money.

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  1. Yokohama, Japan

    Yasushi Nakamura

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  1. Yasushi Nakamura
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Nakamura, Y. (2017). Soviet Monetary Policy and Government Debts. In: Monetary Policy in the Soviet Union. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-49418-4_7

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  • DOI: https://doi.org/10.1057/978-1-137-49418-4_7

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