The process of disinflation in Czechoslovakia and the Czech Republic in 1989 through to 1999

This paper deals with the process of disinflation in Czechoslovakia and the Czech Republic in 1989 through to 1999. It seems that pricing behaviour of microeconomic entities played a crucial role in the process of price level stabilization in this economy, because of direct effects of the company demand shock and variable sources and structure of such demand shock during disinflation stabilization program. The author emphasize aggregate demands character of the primary stabilization program, which was reflected in the large extent of pricing synchronization and high level of price level stabilization in the first months of 1991. On the contrary, the secondary disinflation program initially demonstrated high level of local demand shock and price level inertia, that was connected with the significant changes in relative prices in transition economy and real export of individual groups of goods and services.

Keywords: disinflation, demand shock, price level inertia, synchronization