Inefficiency, Instability, and Restricted Options

  • Paul J. J. Welfens


The former socialist economies of Eastern Europe have decided to switch to a market-based economy and to thereby radically change the set of economic institutions and preferred attitudes in society. The virtues of market-based factor allocation and competition are not easy to recognize for people who lack experience with a decentralized economic system in which allocation is guided by prices and price expectations and in which individual efforts are rewarded. A market-based system means facing uncertainty and risk for the individual, and only part of it can be reduced by insurance markets.


Market Economy Inflation Rate Real Exchange Rate Real Interest Rate Socialist Economy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 1992

Authors and Affiliations

  • Paul J. J. Welfens
    • 1
  1. 1.Department of EconomicsUniversity of MünsterMünsterGermany

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