| Sumario: | This article presents the author's comments on a paper by David Howard about the application of the Barro-Grossman disequilibrium model to centrally planned economies (CPE). Howard presents a relatively simple model of disequilibrium in a controlled economy together with some empirical results, which, he claims, strongly support the presence of repressed inflation in the Soviet Union. On the basis of his results, he confirms the predictive ability of the Barro-Grossman model, and he claims to have improved our knowledge of Soviet repressed inflation. Similar empirical investigations of other CPE countries, Howard also suggests, are of great importance in testing the general applicability of his model and his estimation technique. It is with this aim that a test of the Polish economy was undertaken, but certain difficulties encountered in the process of estimation revealed several fundamental drawbacks in his methodology and estimation technique. The main technical problems are the identification of the model, and the specification of the labor demand function and hence the endogeneity of prices and wages. These will be dealt with first. I shall then go on to discuss more basic problems. These are concerned with Howard's lack of any model of planners' behavior, the assumptions of his maintained hypothesis and the unjustifiable claims he makes for his results.
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