The Second Economy and the Destabilizing Effect of Its Growth on the State Economy in the Soviet Union, 1965-1989
Abstract
The authors suggest that the rapid growth of the illegal underground economy in 1970s
and 1980s has destabilized the Soviet state economy and weakened the mechanism of
central planning. This hypothesis is advanced on the basis of the examination of striking
decline in income (legal) elasticities of demand for a number of consumer goods purchased
in state retail trade in Russia and Ukraine. The growth of income from illegal sources
and purchases of consumer goods in black markets explains this phenomenon.
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https://hdl.handle.net/10161/2007Collections
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