Some simple dynamics of transition from command to market economy

The recent experience of Eastern European economies- Hungary, Poland and Czechoslovakia - is analysed in terms of two simple models, the first model characterises the planned economy and derives an expression for the monetary overhang. The second model analyses the dynamics of transition in terms of an Aggregate Demand - Aggregate Supply model with price expectations. The simultaneous occurrence of inflation and putput loss is derived. Extensions to cover a more complex scenario are discussed.