The centrally planned economies (CPEs) of the Soviet Union and Eastern
Europe have experienced severe imbalances in domestic and external
markets over the past several decades. As a result, they have been
chronically afflicted by problems such as excess demand, repressed
inflation, deficits of commodities, queues, waiting lists, and forced
savings. Economists have responded to these phenomena by developing
appropriate theoretical and empirical models of CPEs. Of particular note
have been the pioneering studies of Richard Portes on disequilibrium
econometric models and Janos Kornai on the shortage economy. Each
approach has attracted followers who have produced numerous, innovative
macro- and microeconomic models of Poland, Czechoslovakia, the German
Democratic Republic, Hungary, and the USSR. These models have proved to
be of considerable value in the analysis of the causes, consequences and
remedies of disequilibrium phenomena. Inevitably, the new research has
also generated controversies both between and within the schools of
shortage and disequilibrium modelling, concerning the fundamental nature
of the socialist economy, theoretical concepts and definitions, the
specification of models, estimation techniques, interpretation of
empirical findings, and policy recommend- ations. Furthermore, the
research effort has been energetic but incomplete, so many gaps exist in
the field.