REPRESSED INFLATION, QUEUING AND THE RESALE OF GOODS IN A CENTRALLY PLANNED-ECONOMY

The Barro-Grossman repressed inflation model is reformulated incorporating the goods rationing scheme widely observed in centrally planned economies, the informal queue. We assume there are two types of individual, differntiated by work ability. This enables inclusion of another feature found in practice, the private resale of goods. Less able individuals queue to buy goods both to consume and to resell to more able individuals. The latter spend their time working for a relatively high wage, rather than queuing. Among the comparative statics results is that the supply multiplier is negative (positive) if goods and leisure are gross substitutes (complements). © 1991.